First, let’s talk about the difference between the annual budget deficit and the national debt. The annual budget deficit is the difference between how much revenue the federal government raises and how much it spends in a budget year. Our national debt is the sum total of all the money we have borrowed to cover the annual budget deficits. The national debt is approximately 19 trillion dollars today.
A January 2016 CBO report predicts a 30 trillion dollar deficit within 10 years. To say that this is frightening is an understatement.
What does the national debt mean to me? A projected 30 trillion dollar debt means that every man woman and child living today in the US owes $93,000. We now spend 7% of the federal budget on interest alone to service the national debt. Less of our budget will go to services and more to service the debt. That 7% figure will grow with increased debt.
How do we address the national debt? We need to control spending and most importantly we must grow. GDP should grow at around 4% which will drive revenues from income tax, payroll tax and corporate tax. GDP growth of 50% or greater will be key to cutting both the budget deficit and national debt. Tax policy is not just a business thing it is the key to growth needed for our families when addressing the national debt.