by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Justin Bogie explains at the Daily Signal how mounting federal debt threatens our current economic prosperity.
For years, budget experts have warned Congress that high deficit and debt levels are not sustainable and will eventually lead to an economic breakdown. Unless lawmakers make significant reforms to entitlement programs—the driving force behind the deficits—it’s a question of when, not if, the breakdown will occur.
At that point, lawmakers will have options for digging out of the rubble: historic tax hikes, historic cuts in government services, runaway inflation, or all of the above.
What does the current situation mean for the average American?
History shows that, over time, countries carrying excessive debt experience slower economic growth. This leads to lower take-home pay for workers and fewer opportunities for Americans to improve their situation.
There is also the real risk of sharply higher interest rates and inflation. Everyone feels the pinch from rising rates immediately, due to higher prices for everyday goods and services. People on fixed incomes are stressed the most, but it also makes it harder for people hoping to make major purchases like a new car or their own house.
Put another way, irresponsible federal budgeting makes it harder for current and future generations to live the American dream.