Is It Possible To Pay Off The National Debt?

The great national debt debate is underway and everyone seems to have an opinion. One question must really first be asked. Is it possible to pay off the national debt? Let’s take a look at the answer.

True National Debt

You’ve undoubtedly heard by now that our national debt is over fourteen trillion dollars and quickly approaching fifteen. These are scary numbers. Alas, they are also incorrect. Ready to be really scared and worried? The real national debt in this country is over $100 trillion. How can this be? The answer is in the fraudulent accounting practices of our government. You see, the politicians simply exclude huge liabilities from the equation when calculating the debt. In this case, the $14 trillion dollars does not include the “unfunded liabilities” of Medicare and Social Security going forward. It is somewhat a kin to calculating your personal net worth, but not including your home loan as a debt.

When considering whether it is possible to pay off the national debt, the question is not can we come up with fourteen or fifteen trillion dollars. The question is can we come up with more than $100 trillion? As you can imagine, that is a bit tougher of a problem.

Formula For Pay Off

Can we really pay this debt off? As a mathematical issue, the answer is clearly that we can. The formula for doing so requires three things to occur. First, spending on entitlement programs must be slashed. Second, income taxes must be raised. Third, a national sales tax needs to be created. If all three of these steps are taken, we would be looking at annual surpluses that could be used to pay down the debt.

Political Issues

The three steps mentioned above seem fairly simple and straightforward. So, why haven’t they been implemented yet? The answer is politics. Any politician that proposes any of these three steps usually ends up being voted out of office. Let’s look at each to see why.

You’ve worked hard for 40 plus years and now it is time to retire. You’ve been paying in money to Medicare and Social Security for years. Now some politician is saying your medical benefits and social security check need to be cut for the good of the country. How are you going to feel about that? You are going to be outraged.  This is exactly what happens when entitlement programs are attacked. Seniors vote and groups like AARP lobby like mad to protect their needs. Any politician willing to go after these programs stands a good chance of being out on their rear in the next election.

How about raising taxes? Well, I probably don’t have to tell you about this one. Politicians that raise taxes rarely survive long. Bill Clinton survived doing it, but the first George Bush did not. Still, this is one area that must be done sooner or later.

Then there is a national sales tax. This concept has the same problem as any new tax idea has. Still, it has one potential advantage that could make it happen. States have trying to tax online transactions for years with next to no luck. Retailers in the brick n’ mortar world also want it done. This may create enough cover for a President to come forward and propose a national sales tax in the guise of creating a level playing field for all retail businesses. If I was a betting man, I would put a few bucks down that we will see this very tax occur by 2015. Still, its passage will not be an easy thing.

Conclusion

Is it possible to pay off the national debt? Absolutely as an academic exercise. The problem is political will. Few politicians have the will necessary to deal with this problem until it becomes a crisis. Such a crisis would rival the Great Depression in its impact, so let’s hope one of our elected officials surprises us and comes up with a credible approach.

<< Back to National Debt Articles

Bookmark this page

Delicious Digg Facebook Reddit Stumbleupon Twitter