Author: R. Alan Harrop, Ph.D.
This is another article in the series on issues vital to our country as we prepare for the 250th anniversary of its founding. There is obviously a growing problem with the soaring national debt, but I also want to address the indebtedness of individuals, which is also a problem, especially for the younger generations. As usual, at the end I will outline some actions that could be taken to deal with these problems.
First, the national debt. If you have never logged into the National Debt Clock, this would be a good time to do so. It provides a running tally of various measures of the country’s financial situation. As of this instant, the U.S. national debt is $ 39.16 trillion and growing by leaps and bounds. This amounts to a $ 357,000 debt for each taxpayer. The interest on the debt has now reached $1.02 trillion per year! This is more than the Dept. of War budget of $935 billion. The highest budget item is Medicare/Medicaid at $1.95 trillion, followed by Social Security at $1.63 trillion. It should be noted that Medicare/Medicaid did not even exist in1960.
The financial health of a country is frequently measured by the ratio of a country’s Gross National Product (GNP; which is the worth of all production) to its total debt. The ratio in 1980 for the U.S. was 34%; now it is 125%, which most economists consider to be unsustainable. For comparison purposes, it would be like owing 125% more than your total income per year. The combined total of expenditures for social programs (including Medicare/Medicaid and Social Security) has now reached $3.58 trillion, which is about 60% of the total budget. If you had any doubts that we are sliding towards Marxism, the figure should resolve those doubts. We are printing money we do not have, or are ever likely to have, like a bunch of drunken sailors, greatly contributing to inflation. Margaret Thatcher, a previous Chancellor of the United Kingdom, once stated correctly that” Marxism continues until they run out of other people’s money,” then it collapses.
Alright, we understand the problem, so what do we do about it? First, we need to stop electing politicians that promise all kinds of free stuff just to get elected. We may need to consider term limits to get them to do the right thing when they are in their last term. A constitutional amendment that requires a balanced budget like those that exist in some states (like North Carolina) would help. Weaning people off free stuff is very difficult if not impossible, but putting limits on how long a person is eligible for each welfare program would help as would enforceable work requirements. Reducing the federal government workforce as President Trump is doing would also help since there are currently 2,568,000 government employees. What is the likelihood any of these actions will be taken? Slim to none. The result if nothing is done is a collapse of the value of the dollar. Not a pleasant prospect to say the least. This is another reason to invest some of one’s savings in precious metals.
Now let’s turn to personal debt. As of April 27, 2026, the total personal debt in the U.S. is $18.8 trillion. The largest portion of the debt is for mortgages, $12.8 trillion; followed by auto loans, $1.64 trillion; student loans, $1.63 trillion, and credit cards, $1.28 trillion. Although the amount of debt is higher for middle aged people, the highest loan defaults are with those from 20 to 29 years old. College tuition is the category of expenses that has gone up the most–at 900%, since 1983. This compares to medical care at 248%, housing at 486%, and gasoline at 192%. I believe that part of the ridiculous increase in tuition was due to the ease at which students could obtain federal student loans as compared to more restrictive private loans that allowed colleges to increase tuition and not lose students. Also, the tremendous increase in foreign students, now at 1.2 million, most of whom pay the highest tuition, has allowed colleges to increase spending. The average college loan balance in the U.S. is $40,000 at 6.5% for 10 years. The average credit card balance is now at $7,220. Approximately, 50% of credit card holders carry a month-to-month balance with interest rates ranging from 20 – 25%. Clearly, indebtedness is increasing especially among the younger age groups.
How can this problem be solved? Listening to Dave Ramsey and reading his books would help. He stresses the importance of living debt free, which of course requires living within ones means. Making and living by a budget and cutting up credit cards are two of his main messages to the younger generation. There was a time when people used cash or even wrote checks that had to be within the limit of the money you had in your account. This made people face the reality of their fiscal limits. People have to take responsibility for their indebtedness and realize that a satisfying and happy life is not dependent on spending money. Quite the opposite in many ways, since conflict over money has been a major factor in marital stress and divorce.