If you're an everyday American, you know that having a big credit card balance can be a problem.
But, can you imagine a credit card with more than $37 trillion on debt?
Think that's unimaginable? Think again. That is the current debt that the United States government owes right now. And, its growing by the billions every hour.
How did we get into this mess?
Glad you asked.
First, the U.S. Constitution allows our government to borrow money on the "full faith and credit of the United States". The problem is, there is no statutory limit other than a debt ceiling which is Imposed by Congress. The problem with this practice is that the ceiling is raised a lot. It has been raised many times since the early 2000s. And, rather than just stop borrowing, Congress does the opposite and keeps digging.
Not only that, it has almost never made any effort to repay that debt. And, to make matters worse, the amount of interest on the Federal Debt is more than $1 trillion a year - a quarter of the U.S. government's annual budget.
Second, the government can print money whenever it needs to borrow it. And, it often does just that.
This leads to inflation and higher prices for goods and services purchased by the American people. It also devalues the currency, making the dollar worth less and less over time.
Many years ago, this was not the case. The gold standard meant that the U.S. government could only print the amount of money that it had in gold. This standard limited the amount of paper money, which, in turn, also limited the amount that the U.S. government could go into debt.
Third, the government is not bound by a spending limit - either cumulatively or annually. This leads to both runaway spending and runaway taxes. This cripples people's ability to spend money because taxes are too high, limiting the amount that can be spent on things such as housing, food, clothing, transportation, education, entertainment, and other needs and wants.
Some states, such as Texas, can only spend up to a certain amount of their revenue. They are forced, by the Texas Constitution, to remain under a certain limit based on a percentage of revenue raised. This keeps both taxes - and spending - in check.
Fourth, there is no threat to being cut off - for now. But, if a crisis does occur, it can mean disaster for millions of Americans, no matter their background. This can include war, economic downturns and depressions, reduced trade, too much misuse of available credit, and other issues that can affect the global economy.
The best way to solve the problem is to do what many families do. This is to set goals, budget for needs and wants, and then stick to the program. It also means we have to examine the books and make the hard choices to make sure that we do not saddle our children with crushing debt.
Fortunately, a great deal for the debt is actually waste, fraud and abuse. Recently, the Trump administration created a program called DOGE, which eliminated billions of dollars in waste and abuse by the government. What is needed is for that work to continue to make sure that the American tax dollar is spent wisely. That way, the cuts only affect the waste part of the program, not the need.