At $31 trillion and rising, the national debt threatens America’s economic future. Here are the top ten reasons why the national debt matters.
- Trillion dollar deficits are now the norm.
The Congressional Budget Office (CBO) projects that the U.S. government will run trillion-dollar deficits over the next 10 years, resulting in a cumulative deficit of $20.3 trillion between 2024 and 2033.
- Interest costs are growing rapidly.
Interest costs were $476 billion in 2022 and are projected to rise to $1.4 trillion by 2033. In 2023 alone, we will spend more on net interest costs than we do on Medicaid and Income Security Programs.
- Key investments in our future are at a risk.
Higher interest costs could crowd out important public investments that can fuel economic growth — priority areas like education, R&D, and infrastructure. A nation saddled with debt will have less to invest in its own future.
- Rising debt means fewer economic opportunities for Americans.
Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar. The federal government should not allow budget imbalances to harm our economy and families across the country.
- Less flexibility to respond to crises.
On our current path, we are at greater risk of a fiscal crisis, and high amounts of debt leave policymakers with much less flexibility to deal with unexpected events. If we face another major recession like that of 2007–2009, it will be more difficult to work our way out.
- Protecting the essential safety net.
Our unsustainable fiscal path threatens the safety net and the most vulnerable in our society. If our government does not have sufficient resources, essential programs like Medicaid and Social Security, and those who need them most, could be put in jeopardy.
- A solid fiscal foundation leads to economic growth.
A solid fiscal outlook provides a foundation for a growing, thriving economy. Putting our nation on a sustainable fiscal path creates a positive environment for growth, opportunity, and prosperity. With a strong fiscal foundation, the nation will have increased access to capital, more resources for private and public investments, improved consumer and business confidence, and a stronger safety net.
- The national debt is a bipartisan priority for Americans.
More than three-in-four voters feel the national debt should be a top-three priority, including 72% of Democrats, 74% of independents, and 86% of Republicans.
- Many solutions exist!
The good news is that there are plenty of solutions to choose from. The Peterson Foundation’s Solutions Initiative brought together policy organizations from across the political spectrum to develop long-term fiscal plans. From budget reform to national security spending to overhauling our tax system, there are comprehensive plans that make placing the nation on a strong, sustainable fiscal footing possible.
- The sooner we act, the easier the path.
It makes sense to get started soon. According to CBO, addressing high and rising debt sooner rather than later means that smaller policy changes would be required to achieve long-term objectives. The benefits of reducing deficits sooner include a smaller accumulated debt and therefore less risk to long-term economic growth and stability. Like any debt problem, the sooner you start to address it, the easier it is to solve.
Addressing our national debt is an essential part of securing America’s economic future. These key fiscal and economic issues should be at the forefront of the policy conversation in Washington, and our leaders should seize the opportunity to pursue sensible reforms that will put our long-term fiscal trajectory on a sustainable path.
