High national debt is still a low priority, but Americans need to take it seriously

When America’s “National Debt Clock” came online in 1989 near Bryant Park in Midtown Manhattan, the objective was to increase attention on our country’s spending problem.

It hasn’t worked.

At the time of its installation, the billboard-sized digital clock — which keeps a running total of our country’s total debt — showed a balance just under $3 trillion. Today, the number is more than $35 trillion ($104,300 for every person in the United States). And yet very few people seem to care.

With a presidential election imminent, this is when Americans can see what our country’s top priorities are, the biggest issues we want our leaders to solve. Based on polling results, news media and the politicians themselves, this list includes topics like immigration, abortion and U.S. involvement in foreign wars. You know what we don’t hear much about? Our historically high national debt or legitimate strategies to fix it.

This is not a political column, but it’s worth pointing out that spending sells in Washington. Voters want to know, “What can you do for me?” from their representatives. “Bigger budgets” and “lower taxes” are the answers that typically garner votes. Both of those lead to higher debt.

Some dismiss the size of our debt by suggesting the U.S. economy can simply grow its way out of the problem. “Debt as a percentage of GDP,” they argue, is a more appropriate measurement, and many economists agree.

In the 1960s and ‘70s, America’s debt-to-GDP hovered around 30%. By 2010, it had ballooned to 60%. It is now approaching 100% for the first time since 1946, when government spending peaked in order to win World War II. The Congressional Budget Office projects debt-to-GDP will further increase to 116% a decade from now.

Higher interest rates have made the cost of our debt even more expensive. The interest alone on our federal debt will cost a projected $892 billion this year. Projections indicate this debt service will exceed 3.2% of GDP every year for the next decade, a threshold America has never exceeded.

Reducing the national debt is an admittedly daunting task. Improving our fiscal responsibility requires short-term sacrifices to ensure long-term security for future generations. That’s not an easy sales pitch in a society where we too often demand immediate results. But the consequences of doing nothing could be worse.

Higher deficits will eventually lead to higher taxes. If that’s too difficult a pill to swallow, we could instead implement cuts to Social Security, Medicare, military spending and infrastructure projects. Without the political willpower to enact any of those, we risk eroding the credibility of the U.S. economy.

The U.S. enjoys an economic advantage by staking claim to the world’s reserve currency. Our Treasury can always print more money to pay the bills because there is excessive demand for the U.S. dollar, considered the safest and strongest currency in the world. At present, there is no viable alternative (the euro is too segmented, cryptocurrencies are too new, the Chinese yuan is too close to an authoritarian regime), but that could change.

Just because the growing debt burden hasn’t fazed financial markets so far does not mean it won’t at some point. Without higher taxes or less government spending, the third path toward more manageable debt is to inflate our way out of the problem. Investors, however, just experienced how stocks reacted to generational inflation in 2022 (not well).

It’s time to take our national debt seriously. Or at the very least, be mindful the clock is ticking on our opportunity to find a solution.