“He who is quick to borrow is slow to pay.” – German proverb

The odds say if you are reading this then you owe money to someone or something.

An October 2023 report from the Federal Reserve stated 77 percent of American families have some form of debt, most commonly from home mortgages, credit cards, student loans and car notes.

There is nothing wrong with having some debt, especially when you are pursuing reasonable goals like owning your own home. It is only when that debt reaches a level where it feels impossible to pay it off does it become a true burden in a person’s life.

You can think of government debt in much the same way as personal debt. Many economists believe the federal government having a manageable level of debt is actually beneficial for the economy.

But like personal debt, the national debt can reach a level that feels overwhelming. Last week the money owed by the U.S. government was estimated to have crossed the $40 trillion threshold. That is the number 40 followed by 12 zeroes. It is a number so large it is difficult to understand how much it represents.

An article by Clara Moskowitz from the Scientific American did a good job trying to explain the scale of $40 trillion.

Moskowitz’ article says if one person spent $1 per second, 1.27 million years would pass to reach $40 trillion. Or, if you laid $1 bills end to end you could make 20 round trips from the Earth to the sun.

Maybe the most effective way to explain it is if every person living in the United States – including children – was required to pitch in an equal amount to pay off the debt then each person would owe in the neighborhood of $117,000.

That feels a bit overwhelming.

Again, like personal debt, the more money a government borrows, the more of its income is eaten up to pay off the interest for that debt. Currently, about 14 percent of the federal government’s revenue – mainly made up of our tax dollars – goes to paying the interest charges on the national debt.

That may not sound like a large percentage of the budget until you compare it with what the government spends in other areas.

According to the nonpartisan Peter G. Peterson Foundation, the U.S. is expected to spend more on interest payments in the current fiscal year than it does on vital areas like national defense, Medicaid, food stamps, veterans’ benefits or transportation projects.

The Peterson Foundation report states there are only two budget categories on which the federal government spends more money, Social Security and Medicare, and interest payments are currently nipping at the heels of Medicare costs.

In 2019, interest payments only accounted for about 8 percent of the budget. Federal spending jumped massively during the COVID-19 pandemic under presidents Donald Trump and Joe Biden for health, business and personal income incentives during the lockdown.

Being able to respond to emergency situations like a global pandemic is the reason why the federal government is not forced to balance its budget. Where both Democrats and Republicans are failing is neither party has the desire to pay down those debts during times when we are not in a national emergency. Times such as now.

With the balance of power between Republicans and Democrats swinging back and forth every few years, neither party promotes a platform of raising taxes or cutting government benefits or using some combination of both to get our finances in order.

Both parties fear taking responsible actions could lose voters for several election cycles. Social Security is by far the biggest expense for the federal government year in and year out, but try being the party that says we will cut Social Security benefits or increase the payroll taxes used to pay for it. See how well your constituents respond.

Yet, we will still face the consequences one way or another. Social Security is projected to be insolvent by the end of 2032, meaning benefits received by the people will likely have to be cut by 22 percent, according to the Social Security Board of Trustees.

If that is not bad enough, at current funding levels Medicare benefits stand to be cut by more than 10 percent in 2033, according to the government board that oversees Medicare funding.

Whether debt is personal or governmental, sometimes the only way to learn financial discipline is the hard way. Without a course correction, we may be introduced to the hard way in a few, short years.