The Monster Under the Bed is Real, and it’s Name is Long-term Debt

27 08 2010

Long Term Debt is an uncomfortable reality plaguing the sweet dreamers of our economy.

How has this monster silently grown to become the massive threat that it is today? For a long time now, the US has been spending more money than it has been bringing in. The time will come when we will need to pay up. In addition to that, in the last two and a half years, there has been even more spending that has taken place to help offset the economic crisis. And to make matters worse, the Baby Boomers are reaching retirement, where instead of continuing to contribute as significantly as they have to the economy, they will be drying it up through the collection of Medicare and Social Security. According to CNN, “By 2021, the cost of annual interest payments alone would top that of the defense budget and itself eat up more than half of all federal taxes, according to information from the debt reduction task force.”

This trail of debt is further exacerbated by the American people, whose debt ratio has increased from an average of 37% in 2000 to 60% this year, and is projected to reach 100% in 2022. This is a serious problem, and worth noting, since many simply point the finger to blame the government. It is time to take personal responsibility and to live within our means. Or else, we will be on a sinking ship with no life vests.

By December of this year, lawmakers will have to focus on how to get the country’s debt under control. In order for this to happen, there will have to be major bipartisan efforts and policy changes such as a mass reduction in spending, and a revamping of the federal tax code.

Getting the Federal Balance Sheet in order will be no small task, and will require pain and sacrifice. This is necessary and will only make the U.S. stronger by not having to be financially crippled and in debt to other nations. Things that can certainly be expected as a result of tackling the Long Term Debt include spending freezes and an increasing of taxes.

If we continue to live our lives as if this is not a pressing issue, it will not simply go away. It will continue to grow to the point that it cannot be ignored, and it will continue to spur on major consequences, such as, “the fall of the dollar, loss of confidence in U.S. ability to pay what it owes, rampant inflation, or a sovereign rating downgrade.”

I look forward to the discussions that will be taking place this December, and hope that they will lead to a healthy plan and strategy for getting the national debt under control. Remember it starts with you. Are you living out of your means? Drowning as you live paycheck to paycheck? Stop now, and take steps towards a healthier way of living. Don’t know where to start? Feel free to email me and I can try to offer some advice.

Take Care!




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