By Bill Wilson — At more than $49,000 per person using the most recent data from the U.S. Treasury and Census, we have a higher debt per capita than any of the PIIGS nations. Elected officials and other central planners attempt to comfort themselves with the false notion that the debt never needs to be repaid. That this $15.4 trillion debt can continually be absorbed by an ever-expanding global financial system. So why worry?
The larger the debt gets, because it is not being repaid and has actually increased every single year since 1957, the more of it needs to be refinanced over time. That eats a larger and larger share of the economy every year, diverting resources away from more productive facilities and into a useless paper trade. As bloated as international financial institutions have become, there will come a point when not even they can afford to lend us more money, as is already happening in Europe.
While it is hard to say where that tipping point is, when it comes—not if, but when—we will be left with two choices: to repay the debt, or to default. To avoid a default, the only solution is to balance the budget now and begin paying the debt down.
This will be a difficult transition for the economy, and to cope with it, it must be accompanied by measures to reduce the cost of doing business in America to attract investment and create jobs. That includes slashing the highest corporate tax rate in the developed world, undoing the burdensome regulatory regime in energy, the environment, health care, and labor, lifting restrictions on capital creation, and strengthening the dollar.
As hard as it will be, at the end of that process, we will be more competitive globally, unemployment will be lower, government will be more limited, and we will be more prosperous.
Bill Wilson is the President of Americans for Limited Government. You can follow him on Twitter at @BillWilsonALG.