The US is taking on too much debt, you should care

On January 19, the US debt officially surpassed the debt limit that the country set for itself. This limit is set at $31.4 trillion, and as of February 3 the debt has surpassed $31.5 trillion. Creighton professor Ernie Goss, PhD, a regional economist, explains that young people are likely to bear the brunt of this issue.

“You are more likely to have to pay for it than I am,” Goss said. “And I am more likely to have to pay for it than my father. I will call it, to some degree, intergenerational robbery.”

Goss said that the debt must be paid for at some point, and that interest is accruing on the debt which will ultimately take up more and more of the federal budget, which will have incredibly negative effects for young people. “It’s getting worse, almost at an exponential rate,” Goss said.

“There will be less and less money to be spent on schools. So as that debt gets larger and larger, it crowds out other things, and won’t be spent on those who are in K through 12 and post￾secondary education,” Goss said. “It will not age well.”
At this point in the article, there are a fair number of questions to be asked. What exactly is a national debt, and who does the government owe money to?

The national debt is the amount of money that the government borrows to cover the“outstanding cost of expenses accrued over time,” according to the Treasury Department. Goss explains that the federal debt accounts for more than 110% of the US’s Gross Domestic Product (GDP) or the sum of all a country’s economic output.

About $24.3 trillion worth of the debt is held by entities that are not the federal government.

This consists of state and local governments, corporations and even the governments of other countries. Other countries own about a third of our debt, with the largest stakeholder being China, who, by itself, owns about 8%, according to the Federal Reserve’s website.

Continuing to put off the national debt will create a negative feedback loop that will continue to hurt young people. Goss talked about the risk of defaulting on debt, which is when the government stops paying interest. The Department of the Treasury is taking “dramatic steps” to avoid default at all costs. “What they’re taking is some of the payments that go into the postal retirement plan. Now it’s going to other purposes,” Goss said. “So they’re avoiding that now, they’ll have to pay that back.”

Goss said that “[defaulting] would be a calamity.” Defaulting on debt would mean higher interest rates on borrowed money, which would disproportionately affect those with less money. “I’ll talk about young versus old, young being say, under 30 years of age, those individuals are more borrowers, rather than lenders,” Goss said. “I’m in the age bracket, who’re more were more likely to be lenders, and borrowers are really going to be hurt by these higher interest rates.”

Goss said that the US will default on its debt if it isn’t able to raise the borrowing limit by the first week of June. If congress can’t come to a consensus, he says the effects would be almost incomprehensible. There would be “Cuts in Social Security payments. Another factor is very likely that you would have significant increases in unemployment. The Federal Reserve’s raising interest rates, and those higher rates will increase unemployment,” if the US were to default on its debt, according to Goss.

Because of a rise in interest rates as a result of a possible default, high schoolers might have a hard time finding a summer job. “[Those who] are about to take that first summer job, that summer job may not be there [because of higher rates],” Goss said.

In essence, the whims of the economy and the federal government affect high schoolers just as much, if not more, than the adults participating in it. A failure to raise the debt ceiling would be, as Goss puts it, a “calamity” for all, but especially younger and poorer people. While it may not be a sexy issue, or one that is easy to understand for that matter, it is important for engaged youth to keep an eye on what is going on with money locally, nationally and internationally.
Goss quoted Herb Stein, a chief economist for President Nixon. “If something can’t go on forever, it will stop,” he said. “At some point in time, it’s got to be addressed. And we keep putting it off.”