Worried about the national debt?

Are you worried about the national debt?  You should be. Here is the current picture as captured from http://www.usdebtclock.org/. 

• National debt: 15 trillion
• Current annual interest payments on the national debt: 220 billion
• With a little math we can figure the interest rate at about: 1.5%

Some more numbers before getting into an analysis:

• Our nations Gross Domestic Product(GDP): 15 trillion 
• Total personal debt in the US including home mortgages: 16 trillion
• Federal spending 3.6 trillion (2011)
• Federal taxes collected: 2.3 trillion (2011)
• Federal overspending: 1.3 trillion (federal spending - taxes collected)

Alright, lets take a look.  Given that the current national debt is around 15 trillion dollars.  The 220 billion it takes for the government to service that debt makes it one of our largest single budget items.  (The largest budget item is actually medicare with  budget of around 830 billion dollars)  What happens to the amount we have to spend to service the debt when interest rates go back up?   We know it is going to happen.. we just don't know when.  To keep the math simple and realistic, let's say the interest rate goes back up to 6%.  that puts the debt service up to 880 billion.  That's just to service the debt we already have forget that the debt is climbing at over a trillion dollars a year.  That will make the debt the single largest budget item we have.

Still not concerned?  Lets examine a couple more areas.  Most strikingly from above we see that the national debt is roughly equal to our GDP.  It is also roughly equal to all of our personal debts including our mortgages.  I'm sorry, but I think it is insane that the government has seen fit to borrow, on our behalf, an amount equal to all of the goods and services our nation produces in a year!  It is further insane that the government thinks it is somehow responsible to borrow as much for us as we borrow for ourselves!  A responsible government would not borrow more than 10% of GDP. Period.

When interest rates go back up, the government will have an exceedingly difficult time raising the money just to pay the interest on the debt.  They will have to pay 1/3rd of what they collect in taxes just to cover the debt.  They will have to borrow even more to cover it... It's a pyramid waiting to collapse.

The answer:   The government has to stop spending so damn much money.  Alternative. tax the rich and corporations you say?  There are several of reasons that wont work but the short answer is: they don't have it.  Taxes are already too high.  And the higher we push their tax rates the less they are going to pay.  They just won't show the income.    Additionally, the rest of the people won't be too keen on paying higher taxes for no additional services. 

In the end the only way to get the debt back under control will be to enact a balanced budget amendment and to stop raising the debt ceiling and above all else STOP THE WILD SPENDING!

*S