EDITORIAL: You should care about national debt
We hear about the U.S.'s national debt: the amount of money that the U.S. has borrowed to continue its operations. Political figures mention this figure when discussing spending plans opposing parties try to push for when in power.
While it might be easy to view this issue as a political football thrown around every now and then, the truth is that it is a ticking time bomb about to blow up in Generation Z's face.
Most people understand the concept of debt as when one's expenses are greater than the amount of money one earns. The national debt is pretty much the same thing at the federal level.
Debt is not always bad. Many Rutgers students need to take out student loans to attend the University. The idea is that the loan is an investment in one's future and that the student can pay it back, along with some interest.
Similarly, the government goes into debt for some good reasons. During World War II, former President Franklin D. Roosevelt expanded spending to help the Allied Powers defeat the Axis Powers, leading to the Pax Americana, a post-war period of peace.
The issue with debt is when it grows and is not addressed, which is the situation the U.S. is currently in.
The U.S. national debt is approximately $35 trillion. This might seem like a big number, but it is important to contextualize this data point by looking at the debt-to-gross domestic product (GDP) ratio.
This measure indicates how likely countries are to pay back their debts by comparing their debt to their GDP, the amount of economic value each country produces. When the ratio increases, it can signal a country's inability to pay off the debt.
This increases the risk of defaulting on the debt (meaning that the country cannot pay it back), leading to inflation as the country issues more currency to pay off the debt, reducing government spending and making it harder for the government to borrow money in the future.
Since World War II, the U.S. has kept its debt-to-GDP ratio low. The big increases really started in 2008 with the American Recovery and Reinvestment Act of 2009, costing the U.S. $800 billion, and with the 2020 CARES Act to support employees and businesses during the lockdown period, which cost the U.S. $1.9 trillion.
The U.S. is not unfamiliar with massive spending increases. But each of these massive spending increases was offset by periods of growth and much more limited spending. With increased spending in the 2000s, it became the new norm.
The costs have been harder to reduce as our country grapples with an aging population who are increasingly reliant on the government to cover their retirement and medical costs.
Our increased spending is not the only contributing factor. Many Republican administrations have been keen on implementing tax cuts but forgot to balance the books. This causes the government to bring in less revenue but maintain the same level of spending.
Now that it's been established how we got to this point, you might wonder why you should care about the national debt.
As mentioned before, when one takes out a loan, they pay interest. The U.S. government also has to do that. But these interest payments have been growing to a problematic level. As it stands, the interest payments cost the U.S. $892 billion in 2024. For context, the U.S. government spends more on interest payments than our entire military.
This figure is likely to worsen, with interest payments expected to cost the U.S. $1 trillion in 2034.
This means that money that could be going into education, social services or infrastructure will go toward paying off the national debt. With interest payments growing, this could continue eating into important government programs.
For example, if interest payments eat into the education budget, it could limit the number of subsidized loans the Department of Education can offer. Additionally, if universities cannot get support from the federal government, they will likely continue to raise tuition, meaning that students will not be able to rely on loans to fully address education costs.
Limiting government funding to certain sectors can also hurt private companies. When the government has to spend money on interest payments, it spends less on investments, which are not only limited to bridges and tunnels but also to research and development. These investments, labeled as discretionary funding, are often trimmed by politicians in favor of their preferred economic policies.
This focus on interest payments blocks future economic growth and innovation, potentially lowering standards of living and economic opportunities.
Additionally, since the government's debt is growing, it is more likely that banks and creditors will opt to purchase government bonds, a way for governments to raise revenue by borrowing money from creditors in exchange for the money to be later returned with interest. Since these creditors are more confident that the government will pay back the bond, they will opt to spend money there instead of funding businesses, which are more risky in terms of investment.
Firms go out of business, and existing companies start to trim budgets, often cutting paid internships that college students use to break into their particular industries.
This problem may not be as flashy as other culture war issues, but it is serious nonetheless. Until we start to pressure politicians to address the national debt effectively, Generation Z's future will be robbed.
The Daily Targum's editorials represent the views of the majority of the 156th editorial board. Columns, cartoons and letters do not necessarily reflect the views of the Targum Publishing Company or its staff.
