With midterm elections just around the corner, candidates on both sides of the political aisle are hitting the campaign trail in earnest. As voters consider their options, there’s one question they should demand a simple, honest answer to: How much does our national debt increase the cost of everything we buy?
The alarm bells are sounding—and they have been for a long time. This year, our country’s debt surpassed 100 percent of gross domestic product. In other words, it would require every dollar produced by our economy to pay off our IOUs. And it’s growing by more than $6 billion every day.
But there’s a more basic truth that should motivate voters to action. Our national debt—and lawmakers’ refusal to get it under control—is making life more expensive for ordinary Americans.
For a family with a 30-year mortgage at last year’s median home price, the federal debt has added about $2,500 per year in additional borrowing costs, or about $76,000 over the life of the loan.
That’s because, as Yale University’s Budget Lab notes, Congress’s out-of-control spending over just the past decade alone has added a full percentage point to Treasury yields, which serve as an anchor point for lending rates. When the government has to pay more to service the federal debt, Americans pay more to borrow.
In other words, Congress’s spending of money it doesn’t have for programs we don’t need is making the goods and services that Americans really do need more expensive.
This isn’t hypothetical, pie-in-the-sky economics. It’s cold, hard cash that comes out of our wallets. For the average college graduate with $35,000 in student loans, it equates to more than $2,000 in additional costs. For a family buying a new car, it can easily add more than $1,500 in extra financing expenses.
The average American will pay nearly $650,000 in interest fees over the course of their life, according to a recent study. As the national debt goes up, rates go up, and borrowing costs go up. Which means that the lifetime amount cited above will be even higher if we continue to ignore the ballooning debt.
Think about that for a minute. Lawmakers’ refusal to get the federal debt on a sustainable, downward path—and their insistence on increasing spending—is putting the dream of owning a home, getting an education, and providing for one’s family further out of reach for most people.
High inflation and rapidly rising costs of living are the top concerns for Americans, and rightly so. As one recent study put it, families are feeling gloomier about their finances than they have in years. Young people are putting off having children and adopting what some have called “economic nihilism.” Older adults are delaying retirement. Almost half of Americans feel worse off financially than they did only a few years ago.
As politicians do, policymakers in Washington have launched studies and held hearings to try to understand this burgeoning affordability crisis. We can’t have a healthy economy if our debt is unsustainable. It’s like driving a car with the “check engine” light on. It will break down eventually.
To be sure, the course our country is on is not sustainable. As a country, we spend more on interest to service the federal debt than we do on national defense. We pay more in interest than we spend on all federal discretionary spending combined. Nearly 20 cents of every tax dollar go directly to interest payments.
This election season, as candidates make all kinds of grand promises, the kind that usually entail more—more spending, more programs, more entitlement—voters should ask themselves, is this worth me paying more for my home? For a child’s education? For a new vehicle, a family trip, or any other big-ticket purchase? Is it worth potentially having to delay retirement or earning less over the course of a career?
Because those are the consequences of ignoring our debt and continuing on Washington’s reckless spending spree. It’s the kind of reality politicians—and we as voters—need to start operating in to get real about the national debt crisis.
