understanging the national dept 3 5

For decades, America's national debt has grown steadily, almost silently, in the background of society. But in early 2023, that accumulation suddenly accelerated into shocking territory.

It's a dizzying figure, equal to over $100,000 owed per U.S. citizen, highlighting how America has been living far beyond its means. Easy money and deferred consequences made it possible to ignore the implications for a long time. But the crisis can no longer be denied.

While abstract on the surface, the debt spiral has potential profound human impacts lurking beneath. Funding vital public services and investments for families and communities hangs in the balance. The question of who has reaped the rewards from past overspending - carries deep moral weight. America's global reputation, the dollar's stability, growth prospects, and even national security now face heightened uncertainty clouded by unprecedented deficits.

Some say, most of all, the mushrooming debt could represent a tragic betrayal of duty to future generations, saddling our children and grandchildren with constraints and burdens they did not consent to carry. America faces a collective reckoning demanding courage, accountability, and economic vision on a scale not seen in generations. There is no avoiding the choices ahead. But if met wisely, this crisis could spark societal flourishing for decades.

Debt Spiral: When Trillions Don't Shock Anymore

It wasn't long ago when hitting a billion dollars in debt seemed an unfathomable milestone. Such vast sums were once unthinkable. But today, America tosses around figures like trillions with numbing regularity - representing a profoundly dangerous shift. Be it true or not.

Crossing the $34 trillion debt threshold means every U.S. citizen owes over $100,000 as a share of the IOU. Compare that to 2000, when debt clocked in "only" around $5 trillion total. Then came the toxic mix of tax cuts, recessions, stimulus packages, endless global military operations, a pandemic...and the compound interest tidal wave built and built.

Two decades later, we inhabit an entirely different fiscal universe of virtually unlimited public financing until the money runs out. The U.S. now blows through trillion-dollar borrowing milestones every few months. It's the equivalent of a family racking up six-figure credit card debt yet continuing to spend unfazed. Yet there is no actual comparison to the US federal debt and a family's or business debt.

Eventually, though, such reckless spending catches up to even world superpowers. Credit agencies warn that persistent deficits now seriously threaten America's fiscal strength long-term. Yet, with many families struggling to afford basics like healthcare and childcare, the Republican party alone refuses to address they have created this mess nearly single-handedly with the help of very few Democrats as they insist on diverting American wealth to already wealthy.

The paradox leaves the U.S. trapped in a kind of debt death spiral. Everyone knows it is unsustainable, but there is little willingness by Republicans to change their priorities of further embolding the rich.. So round and round it goes, with trillions in debt looming ominously. Creative, compassionate solutions are urgently needed before the damage becomes permanent.

Following the Money: Do Tax Cuts Boost Debt?

As America's debt spiral intensifies, one clear contributor has been diminished tax income. Recent decades saw extensive tax cuts, benefiting mega-profitable corporations and the ultra-wealthy. For context on the revenue hit, federal tax income as a share of GDP now sits near 60-year lows.

On its face, the link between tax cuts and ballooning debt makes basic mathematical sense - less money coming in results in a more significant gap between spending and revenue. Yet advocates argue lower rates spur enough extra growth to "pay for themselves" via boosted economic activity. The famous "Laffer Curve" represents this supply-side theory.

But do the promises match reality? Emphatically, no, based on recent evidence. An exhaustive analysis of over 300 highly profitable corporations shows most exploit enough loopholes to pay far below the stated 21% tax rate. A quarter of companies surveyed had effective rates under 10%, with dozens paying just 5% or less.

The claimed connection between tax cuts and growth utterly fails to square up with the rapidly deteriorating fiscal picture. America's experiment in supply-side economics has led to anemic public investment, crumbling infrastructure, and, yes - the out-of-control debt spiral. Just as concerning, it has concentrated resources in fewer hands while squeezing public funding for families' urgent needs.

Slicing to Shrink? Dangers of Severe Cuts

With debt rising relentlessly, Republicans now push for a powerful "debt commission" to force tough choices on programs like Social Security, Medicare, Medicaid, and nutrition aid. Their goal is to slash spending they consider wasteful or non-essential. And no talk of reforming the tax system.

Yet their definition of "waste" often targets support systems relied upon by millions of vulnerable citizens already struggling to afford basic needs. For decades, prominent conservatives have openly strategized that by gutting government revenue and then starving budgets, they can deliberately shrink the public sector's scale and influence across society.

There is virtue in fiscal restraint and targeting true excess. But critics argue the extreme cuts now proposed risk dealing crushing blows to families and communities still recovering from economic body blows. And with critical public services and benefits threadbare, where would responsibility lie for tackling challenges like hunger, homelessness, untreated illness, or poverty? Relying on corporate generosity seems ridiculously optimistic as inequality reaches new extremes.

In truth, there are no easy fixes to budget quagmires this deep-rooted except through political change. But "solutions" must still match the natural human desperation behind the statistics. Slashing lifelines for the disadvantaged while further boosting the privileged not only skews morality - it places the entire economy at risk by eroding consumer spending power. But the fastest way to rip society's fabric is by forcing those with the least to endure the deepest wounds.

The Failed Republican Supply-Side Experiment

Recent decades provided a real-world test run for supply-side economic theory. The premise sounded alluring - cutting tax rates would spur investment, growth, and jobs so that even more tax revenue would flood in. The famous "Laffer Curve" claimed a "sweet spot" where lower rates would boost income beyond the initial cuts.

This philosophy underpinned repeated federal and state tax cuts benefiting corporations and the ultra-wealthy mainly. Yet the promised prosperity benefits largely failed to materialize. Yes, economic activity grew - marginally faster at times than peer nations. But more is needed to offset the giant revenue hits.

The verdict is that supply-side policies failed miserably at their own goals while massively accelerating debt levels. Far from "paying for themselves," trillions in tax cuts directly fed astonishing deficits they now considered an emergency.

And that only hints at the broader fallout. Crumbling infrastructure and depleted public funding squeezed families struggling with stagnant wages and rising living costs. Yet the privileged few hoovered up literally trillions in cumulative gains. Hollowing out the tax base didn't build a dynamic society - it bred inequality and fiscal wreckage, jeopardizing future prosperity.

Rethinking Debt Orthodoxy: The Modern Money Lens

A growing cohort of economists champions radically rethink fretting over federal debt through the lens of modern monetary theory (MMT). Their core insight: America's debt mechanics differ fundamentally from households or businesses.

As the issuer of the world's primary reserve currency, the U.S. federal government need never technically default as long as debt repayments are denominated in dollars. The Federal Reserve can create necessary liquidity to retire obligations or buy back debt. Some MMT scholars argue that national debt is an arbitrary accounting convention more than an economic restraint.

In this view, focusing on debt and deficits distracts from real constraints like inflation risks, resource limits, inequality, and environmental damage. Rather than endlessly trying to "pay for" public spending, the proper role of responsible fiscal policy is pricing public goods and services at levels matching economic capacity. Taxes then help temper inflation. Budget decisions become matters of collective priorities.

While still a minority view, MMT perspectives offer healthy challenges to debt orthodoxy. They urge examining who benefits from government spending and pays taxes rather than abstract debt loads detached from natural resources. Reframing debt debates around rights, fairness, and sustainability could lead to wiser, more humane policies.

A Duty to Future Generations

There’s no dodging the reckoning ahead. But faced honestly, the debt crisis presents a doorway for national renewal. Closing loopholes, taking on entrenched interests, and asking all to contribute fairly could balance budgets more humanely while funding overdue reforms. Above all, responsible budgeting means upholding our sacred duty – handing the next generation not just financial statements, but opportunity, dignity and control over destiny.

About the Author

jenningsRobert Jennings is co-publisher of InnerSelf.com with his wife Marie T Russell. He attended the University of Florida, Southern Technical Institute, and the University of Central Florida with studies in real estate, urban development, finance, architectural engineering, and elementary education. He was a member of the US Marine Corps and The US Army having commanded a field artillery battery in Germany. He worked in real estate finance, construction and development for 25 years before starting InnerSelf.com in 1996.

InnerSelf is dedicated to sharing information that allows people to make educated and insightful choices in their personal life, for the good of the commons, and for the well-being of the planet. InnerSelf Magazine is in its 30+year of publication in either print (1984-1995) or online as InnerSelf.com. Please support our work.

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This article is licensed under a Creative Commons Attribution-Share Alike 4.0 License. Attribute the author Robert Jennings, InnerSelf.com. Link back to the article This article originally appeared on InnerSelf.com

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