There is a debt problem in the U.S. People have been borrowing money at an alarming rate over the years, many beyond their ability to repay. Credit cards are identified as the chief culprit of the growing debt crisis. People have been borrowing money at a steadily increasing rate to satisfy their ambitions and cover their expenses: the "trap of easy money" as some call it. Many have run up debt to improve or maintain their lifestyle. Others have relied on credit cards to help themselves through college or to meet expenses and keep themselves afloat during difficult times. Whatever the reasons, personal debt is on the increase.
In Seattle, Washington the average debt per person is $26,646 according to Experian, a business and consumer debt reporting firm, followed closely by Dallas where the average consumer debt is $26,599. Denver, Atlanta, and Phoenix are other cities where the average consumer debt exceeds $26,000 per person. The national average is $24,775. Grim numbers indeed. But that is not the end of their financial woes. As of 2009, the per capita share of the national debt was $40,101. According to the latest U.S. census, the average annual income in the U.S. is $35,659. In a sense, the average tax payer is bankrupt.
In 2000, the national debt represented 79% of personal income in the United States according to Experian. In 2009, that percentage had grown to an astonishing 112% of personal income, up from an appalling 99% percent in 2008. It is going to get worse. The deficit is expected to grow to $1.5 trillion over the next year. Even if every household in the U.S. payed off their credit cards and mortgages, most Americans would still be in debt well beyond their ability to pay. Their share of the national debt is nearly insurmountable. While there has been a concerted effort over the years to get a grip on personal debt, there has been little effort to address the government's debt beyond oration and exhortation. Few seem to realize that the government's debt is ultimately our debt. The government does not spend its own money. It spends our money.
People have been willing, often reluctantly, to take the advice of experts and cut back on their spending and make sacrifices in order to make headway on their debt. Some simply have had no choice. The government has made no such effort. Quite the contrary. President Obama has been determined to spend even more and accrue new costs and obligations. The deficit increased by $960 billion last year alone. While President Bush began digging the hole we find ourselves in today, President Obama has decided to dig even harder. Worse, he seems to have concluded that the only way out of the hole is to keep digging. Maybe Obama believes that if he keeps digging, he will finally dig his way to China. That is where the money is.
Perhaps the government has been willing to pile up the debt because it it believes that no one will foreclose on it or repossess anything it has bought. They are right. The Chinese are not going to repossess our health care system. But they can ruin our credit and make it impossible for us to keep running our government as it has been running unless it makes drastic spending cuts or raise taxes exorbitantly. Neither prospect is likely. If our credit line is cut off, the effects would be disastrous given our budget. Even FDR himself would not be able spend his way out of that.
Personal debt is undermining the economy. Government debt will ruin it. If people are having difficulty paying their debts, how can we expect them to pay the government's? Who is going to cut up the government's credit card? Just as borrowing money has been the bane of many people, it will be the ruin of the U.S. If the government cannot borrow what it needs, it will get it from us. If you think creditors and banks are determined to collect what they are owed, wait until the government shows up at your door.
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