When most people share opinions on the US debt, they speak in terms of the future. They’ll remark about the incredible burden that rising debt will cause for their grandchildren. Although it is certainly true that long-term debt is a major concern, the rising American bill could matter sooner rather than later.
So why does the US debt matter to you? Beyond the obvious struggle that accompanies an American government slowdown, it is worth considering the strength of social programs, the state of consumer borrowing, and other influential factors.
A metastasizing cancer
The growing American debt is something that builds on itself, making it especially dangerous. Though it might seem like something that will take decades to come to fruition, the growing US debt could snowball in the coming years. Studies show that when debt historically reaches levels that the US is currently experiencing, economic growth is curtailed.
A 1% decrease in growth is important, as it will spurn job growth and lessen the power of American investments. Anyone planning on living in the country for the next decade will want to take note of this situation, as it could prevent American economic recovery.
More difficulty in consumer borrowing
American debt will not only impact the government in its quest to borrow. It can also impact consumers. As the US debt grows, we are in danger of losing prime credit status. Creditors are becoming more and more skeptical of America’s willingness to deal with its debt issue.
If this feeling continues, American consumers will experience increased interest rates and general difficulty with consumer funding. As a result, small business development will be curtailed and the economy will suffer the consequences. The clear trend is a snowball effect that figures to build on itself over time.
Less federal government support
Though some might argue that the government spends too much money on programs, there are a few that are essential. As the debt grows and America is able to borrow less money, they will need to cut the fat. This means that certain programs will be cut out and others will be limited.
Certain programs, like Social Security, are already struggling. As funding is cut more, Americans will suffer in quality of life. Education, infrastructure, and defense are three areas of particularly worry, as they account for a major federal expense. A downgrade in these programs could be disastrous, to say the least.
The debt situation isn’t getting any better and the impact could be felt sooner rather than later. It will certainly impact your grand kids, but the US debt matters to you, as well.
Tags: debt, economics, national debt, US debt