In November of 1991, Dan Gookin published the first of what would become a popular, acceptably-insulting series. DOS For Dummies was edition #1 of the educational insult, selling just 7,500 copies 34 years ago. But as the series branched out to more general-interest titles and topics (having now included everything from Chess, Fishing and Olive Oil to Pit Bulls and Captain America), the series has grown in popularity. But how does an embedded insult become so popular?
Writes publisher John Wiley & Sons: “Dummies has always stood for taking on complex concepts and making them easy to understand. Dummies helps everyone be more knowledgeable and confident in applying what they know. Whether it’s to pass that big test, qualify for that big promotion or even master that cooking technique; people who rely on dummies, rely on it to learn the critical skills and relevant information necessary for success.”
In other words, it’s ok to admit what we do not know — even wise to. It would be silly, in fact, to think we would have a working knowledge of all things. Hence, “dummy” is not actually an insult; it’s an admission that we have more to learn.
In light, no less, of the federal government’s current budget prioritization — and a debate about the prudence of their approach is certainly worthy — one complex concept that would be helpful for us dummies to more fully understand is our national debt. We all could learn more; the hope is to have both comprehension of the issue and compassion for those who are impacted.
The national debt is the total amount of money the federal government owes, meaning borrowed money plus interest. Also known as the federal debt or public debt, it’s the sum of all the federal government has borrowed over time to cover its expenses. When the government spends more than it takes in, it has to borrow money to cover the deficit. Each year’s deficit adds to our debt.
The money is borrowed from sources both foreign and domestic. It’s borrowed from individuals and institutions. It’s also borrowed from foreign governments. While the majority of our debt is held by domestic holders, our dependency on foreign lenders has increased significantly in recent decades, now surpassing 30%. As for foreign governments, we owe over a trillion dollars to Japan, with China, the UK and Luxembourg close behind.
Some other significant points to aid in our comprehension:
- The current debt is over $36 trillion dollars.
- It grows by approximately $1 trillion ever 100 days — or $10 billion per day.
- If every American paid an equal share of the debt, we’d each pay over $106,000.
- The last year the federal government did not have a deficit, adding to the debt, was 2001.
- The Clinton administration was the last administration to utilize a balanced budget.
- The more we borrow, the more we pay in interest.
- Every day, we spend $2.6 billion on interest.
- Interest is the fastest growing part of the federal budget; imagine a huge credit card bill that never gets paid off.
- In ten years, interest will nearly double from where it is today.
- A low debt-to-GDP ratio demonstrates a country’s ability to pay back debt; 60% is often cited as healthy. The US’s debt-to-GDP ratio was most recently reported to be 123%.
- Rising debt can lead to erosion of confidence in the US dollar.
- 79% of voters* say they want the President and congress to spend more time addressing the national debt.
The zillion dollar question, therefore, (or at least $36 trillion one) is when does our debt level become unsustainable? Lawmakers keep kicking the can (and each other) down the road, so-to-speak, never solving the issue, as it’s not popular to cut payments and programs various ones of us have gotten used to and/or depend upon. Additionally, two of the biggest budget expenditures — Social Security and Medicare — operate at such a significant deficit, that each is projected to face insolvency in the next dozen years. Each is mandatory in the budget — meaning, if not addressed, mandatory spending will soon trigger additional mandated borrowing.
Clearly, the rate at which the debt is growing is unsustainable. Penn Wharton, the business school at the University of Pennsylvania, believes a “best case scenario” is that “under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly.”
True, too — and sad, in my opinion — is that politicians who sincerely strive to address this issue are often demonized by their opponents. On one hand I understand. Cuts are hard; they have the potential to hurt people. Hence, compassion for who and how people are impacted is necessary.
Simultaneously, comprehension of the consequences of this issue is also necessary…
For far more than us dummies.
Respectfully…
AR
[Notes: “GDP” stands for Gross Domestic Product, which is the total value of goods and services produced in a certain time. *Also, sources utilized include but are not limited to The Balance, Penn Wharton, The Peter G. Peterson Foundation, Tax Foundation, and the U.S. Treasury Dept.]