In the late 19th century Alexander Hamilton wrote “national debt, if it is not excessive, will be to us a national blessing.” A nice idea in theory, but America’s governments since then haven’t quite stuck to the plan.
Instead, the U.S. economy is resting atop a public debt exceeding $34 trillion, with its debt-to-GDP ratio sitting at around 120%. Perhaps not the blessing the Founding Fathers had once envisioned.
Now, alarm bells are beginning to ring with increasing frequency and volume.
Jamie Dimon says Washington is facing a global market “rebellion” because of the tab it is racking up, while Bank of America CEO Brian Moynihan believes it’s time to stop admiring the problem and instead do something about it.
And despite the issue being the “most predictable crisis we’ve ever had” according to former Speaker of the House Paul Ryan—a summary Dimon agrees with—it’s an item that isn’t yet top of the political agenda.
It’s also worth noting this isn’t the job of one party or the other to fix—this debt has been accumulated courtesy of spending by both Republicans and Democrats.
The list of presidents who added the most debt by percentage begins with FDR (Dem.), followed by Woodrow Wilson (Dem.) and Ronald Reagan (Rep.).
Whoever’s shoulders it falls on to address, it’s clear the public now wants action.
Last year Pew Research found that ‘reducing government debt’ was a key concern for 57% of the 5,152 people surveyed—up from 45% just a year prior.
But do individuals—who currently have a sum of more than $100,000 dangling over their heads when debt is divided by capita—need to be so concerned about the issue?
How will it impact their purse strings, their living costs, and their savings plans?
How big is the threat?
It depends on who you ask.
If it’s the Peter G. Peterson Foundation you’re talking to, the issue is pretty sizable.
The New York-based nonpartisan organization dedicates itself to increasing public awareness around fiscal challenges, with the increasing government debt being one of its top concerns.
The group believes debt could lead to reduced public spending, private investors losing faith in America’s economy, a shrinking…