Wanted: A good solution

The U.S. national debt is now $30.4 trillion dollars. The government has spent that much more money than it has collected in tax revenue. Per person, it means that every U.S. citizen, including diapered infants, owes $95,000 dollars. The U.S. Congress has allowed the debt to increase every year, except four years, since 1970. The George W. Bush Administration increased the national debt by five trillion dollars in eight years. The Trump Administration increased the national debt seven trillion dollars in four years. We have two problems: paying the existing debt and curtailing the annual deficit spending (new additional debt). 

Government debt can be serviced by: 1) taxation, 2) inflation, 3) curtailment of government services, or 4) by default (not paying the debt). Implementation of any of these solutions ranges between undesirable and catastrophic.

If the federal government had attempted to acquire as much money in taxes in fiscal year 2022 as it spent, each person who held full time employment would have had to pay an additional $6000. That number is an average; some people would have paid more, some less, depending on their income. Payment of the extra taxes would not have reduced the existing national debt.

The federal government must pay interest on the national debt. During fiscal year 2022, the interest paid was $399 billion dollars. The interest rate was very low, but that rate could easily increase making annual interest payments a serious challenge. 

If the federal government were to increase the federal income tax rate enough to eliminate the annual budget deficit and begin to reduce the national debt, that would be money that people could not spend for things they want or need. Companies that sell goods and services that people want or need would require fewer employees. Big box stores are currently eliminating check-out cashiers; the customers do the work while the company takes the profit. Technology advances in automation and artificial intelligence are eliminating jobs. When we eliminate jobs, we also eliminate tax revenue. A large percentage of the manufactured goods we buy are made in foreign countries, and those jobs generate no federal income tax.

One place where taxation is needed is electronic advertising on internet devices. The advertisements are rudely splashed across the screen when we are trying to read text. They are repeated as we scroll. They are placed on the side of the screen where they jiggle and bounce to distract and annoy in an effort to gain the reader’s attention. If this obnoxious advertising behavior were taxed enough to moderate it, the U.S. government could acquire some much-needed revenue, and all of us would be spared some of the aggravation.

Inflation is what we are experiencing—more dollars that buy less. In addition to inflation of the currency, price increases resulting from high demand or shortage compound the problem for many citizens. The population of the U.S. has been moving from rural areas to urban areas to obtain jobs, and that has caused a shortage of affordable housing while also increasing the prices of houses and apartments. As marketing corporations become larger, they eliminate smaller companies, and price competition for products and services diminishes. When the government raises interest rates to curb inflation, sales of “big ticket” items decrease, but people increase purchases of lower priced goods and services that do not require high interest rate loans. Sellers take advantage of the added demand and raise prices. 

Curtailment of government services and the many activities that the federal government pays for would guarantee fierce hostility. No one wants to lose their income stream.

Default, not paying the national debt, would destroy the reputation of the United States.

There is no easy solution. Politicians will work out some token solutions that allow them to “save face,” or place blame on other politicians, but the national debt problem will probably still be a burden for future generations of Americans.

Jack Stevenson is a retired infantry officer, civil service and private corporation employee who now reads history, follows issues important to Americans, and writes commentary from his home in Pensacola, Florida.