National Debt & Deficit Spending National Debt & Deficit Spending
As I travel Wyoming I have heard people discuss the National Debt and Deficit Spending as if just balancing the Budget will cure the National Debt.
Not true.
This is as if one could pay all bills at the end of the month and say that ones MasterCard® balance was being reduced by paying the minimum payment. The numbers do not work that way. One must also have enough extra money to first pay all of the interest charges and then to reduce the principal amount of the debt.
To put this into perspective: If you were paying off our current $9.5 Trillion national debt as a 30 year, fixed rate mortgage at 4% interest, the payment would be a bit over $360 Billion per month. (Get out your Excel® Spreadsheet, use the PMT Function for $9.5 Trillion, 4% (annual interest rate), 360 payments, and zero final value.)
The magnitude of the problem facing our Congress is simple: we have already handed this bill to our children. What is to be done?
First: The Congress must terminate "earmark spending" practices. These not only waste money but also crowd out productive activity. Yet the reality is that “earmarks” represent just 0.6% of Federal spending. More must be done.
Second: The Congress must seriously address wasteful systemic financial practices such as exist in the Pentagon and similarly wasteful systems in other departments.
Third: The Congress must discipline itself to a significant paydown of principal every year.