What is the National Debt, and should you care?
The easiest way to explain it is to personalize it: it's the balance you owe your Credit Card companies, it's what you haven't paid; or it's an extra hidden addition to what you owe on your mortgage.
With the Debt at $7.5 trillion (December 2004), your share (average family of four) of public indebtedness is $109,000. One Hundred and Nine Thousand dollars! I'll bet you didn't know that you were in the hole that much with your credit card debt. If you don't believe me, do the math.
These three definitions say exactly the same thing; whichever makes the most sense to you is the one to think about.
Some would like you to believe that Deficits don't hurt you, that the National Debt doesn't affect you. Well, as long as you can keep the Credit Card companies away from your door, as long as you can keep your bank from foreclosing on your house, as long as your creditors are willing to wait, they are right. But while you don't pay down your debt, it keeps getting larger, even if you don't add to it with new purchases. Eventually you have to pay the piper.
And if you avoid paying down your debt, just exactly how much interest would you have to pay to keep it from growing? Well, if this $109,000 is Credit Card debt, with a 15% APR, you'd have to pay an additional $1362.50 /month, or $16,350 / year, just to keep it at $109,000 forever. And if you don't make these interest payments, the $109,000 will increase to $125,350 in a year, to $144,000 in 2 years, to $166,000 in 3 years and to $191,000 in 4 years.
But they told you that when the government spends more than they take in, they just print the extra money, it's no sweat off of your back. Again this is partially true. Let's say you buy 1000 shares of a public company, and this 1000 shares gives you 10% ownership of the whole company (represented by a total of 10,000 shares). Then, later, the company decides to float a new stock issue (it's done all the time) of 5000 new shares. Well, you still own 1000 shares of the company; but your piece of the company has been reduced to 6 2/3% ownership. Your piece of the pie has been reduced from 10% to 6 2/3%. Your ownership has been "diluted." You have lost part of what was yours even though you still own the same 1000 shares. If you still think you haven't lost something when the government spends money it doesn't have by printing new money, think again. Or ask your Accountant. Or banker.
Fiscal Conservatism is what keeps the debt from building too quickly. Fiscal conservatism is the Republicans' battle cry. It's one of the key differences between them and the Democrats. But what about Republican fiscal conservatism? President Reagan expanded the debt at a rate of 14% / year, nearly tripling it in his two terms. George H W Bush expanded the debt at a rate of 12% / year, to 4 times as much as it was before Reagan. Clinton expanded the debt at a rate of only 4% / year. And George W Bush is second only to Reagan in how quickly he has grown the debt, adding nearly $2 trillion in only 4 years.
The Debt doesn't matter? What you don't know can't hurt you? Well, now you know differently; it is hurting you, whether you feel it now or not. How do you boil a frog? Slowly, so he doesn't feel the water getting hotter on its way to the boiling point.
You wouldn't believe a salesman who told you he'd give you something for nothing. So why would you believe a politician when he tells you that it will be paid for by printing money, it won't cost you a thing. If it were true, you and I should not have to pay any taxes at all! Give us our money back!!!