Does the National Debt Affect Me and My Benefits?

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As of February 6, 2022, the United States’ national debt is $30 trillion. The average American citizen can have a tough time wrapping his or her mind around a figure that large. Owing a number with thirteen zeros should make any one with common sense turn pale. But this is America, we’re the largest economy in the world. Plus, even though our country owes this much debt, we don’t necessarily feel it in our day-to-day lives.

So, the questions become, how do we quantify the national debt, and make accurate comparisons to make it easier to understand? Does the national debt affect me, and if so, how?

What is National Debt?

Once again, the economic experts at Investopedia answer the call, as Troy Akins reports on the National Debt. National debt is the same as regular debt, just on a global scale. The reason it’s global is because our nation does business with other countries as well as with itself. National debt occurs when the country spends more than it makes from taxes. The U.S. develops a budget deficit, using Treasury bonds to pay for government services. The net buildup of the yearly deficit turns into the national debt.

Truthfully, the United States has almost always been in debt since the country was founded. No one likes being in debt, but it’s a natural part of operating as a global superpower. Traditionally, the American public waxes and wanes on the national debt issue. Support for accumulating more debt grows when the debt services economic grow and future stability. When the debt only serves to continue maintaining our current state, people generally are opposed to it.

Our current national debt is so high due to the pandemic and a recovering economy. Congress likes to grandstand when it comes to the debt ceiling, which is the maximum debt the nation is allowed to take on at one time. However, to default on our debt would be catastrophic for everyone, not just the political party in charge at the time. As a result, the debt ceiling is often raised to allow for more debt to be incurred, letting the country continue to operate.

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Quantifying the National Debt

Economists like to compare the national debt against the Gross Domestic Product (GDP). The GDP can be unreliable as it doesn’t factor in outsourcing work, technological advances, or negative cost-cutting business practices.

Breaking down the national debt per capita, or per person, makes it easier to understand than comparing it to the nation’s GDP. The national debt per capita formula looks like this.

Net Debt= ((long-term + short-term debt) – cash)/ Population

Put into those terms, it means that today’s $30 trillion national debt is roughly equal to $90,000 per American citizen.

Does the National Debt Affect Me?

The simple answer is yes it does, but in specific ways. The national debt doesn’t affect us directly most of the time, with the Social Security Trust being one of the few exceptions. It acts like a domino effect, where the National Debt affects the economy and political power of a nation, which then direct affects its people.

Mostly, the national debt affects me by potentially lowering my standard of living. When it comes to Social Security, it puts the program at risk only when the debt ceiling isn’t lowered. Benefits would be delayed or completely halted, and though people would still receive payments, they’d have to wait longer for potentially smaller sums.

The national debt can also make it harder to invest in the economy and borrow money in general. These side-effects can have a direct affect on the individual.

CNN’s Zachary Wolf lists reasons to both worry and not worry about the national debt. Realistically, the only way to repay the national debt is through taxes. However, that doesn’t mean the government is going to tack on an extra $90k to everyone’s bill. The debt itself is never going to go away fully, and it will grow and reduce as the economy fluctuates. While we will always have to deal with it, it can be manageable and even help benefit the overall economy as we recover from the pandemic. Looking at the situation through that lens, make it easier to not worry about.

Congress Must Make Social Security a Priority

The national debt is a rising concern, but it shouldn’t be. We’ve been forced to worry about it because of the lack of action from Congress. Refusal to pay our debts isn’t an option, and not taking on debt is also not an option. National debt is a natural part of running a country, but it should never be allowed to affect us, or our Social Security, directly. Our government must look at its finances more realistically. The time to worry about the debt we incur is when we are creating a budget, not when we have already spent the money.

Questions like “Does the national debt affect me?” are easy to answer. The national debt affects everyone and everything, but the only time we should worry about it is when Congress uses it as a political tool, putting our Social Security at risk. The Council for Retirement Security is demanding Congress make Social Security a priority when it comes to planning for the future and taking on more national debt. Join us in our work to protect and preserve the benefits all retired Americans have earned.

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