In an article for Forbes, Mike Patton, a Contributing Editor with Investment Advisor magazine, explains how the mushrooming national debt will cost the public an exorbitant amount of money. After pointing out the simple truth that the reason debt is dangerous is that “a dollar borrowed today necessitates that a dollar plus interest be repaid in the future. This reduces the amount of money available for future spending,” Patton segues to explain the rise in “public” debt since 2004.
Pointing out that the federal debt was $7.3 trillion in 2004 and over $18 trillion now, with an expected increase to $21 trillion by 2019, Patton states that the concurrent cost to taxpayers rose from $72,051 per taxpayer in 2004 to $154,161 today, an average annual increase of 7.16%, greater than the concurrent average annual wage increase. The Congressional Budget Office expects the national debt to rise to $27 trillion within ten years, which will entail the taxpayers paying the federal government $722 billion a year.
Then Patton explains the domino effect of such a burden on taxpayers. As taxes rise so the federal debt can be paid for, the private sector will shrink, triggering smaller wage increases; thus attacking the taxpayers from both directions, taxes and wages.
Patton continues by noting that America’s debt-to-GDP ratio in 1980 was only 35.4%, rose to 57.7% in 1990, and today stands at 102.6%, which means our debt is more than we produce.