The National Debt: The Greatest Threat to Our Nation’s Future.

The National Debt:

The Greatest Threat to Our Nation’s Future

On November 28, 2014, our National

Debt exceeded $18,000,000,000,000

At the present rate, the debt will reach

$25 trillion by 2023

If we placed dollar bills end-to-end, $18 trillion

would stretch to the moon and back

What is $18 Trillion?

over 3,000 times

If each citizen had to pay their share, we

would each oweabout $57,000

Deficits Cause Debt

In 44 years, we have had a budget surplus only 2 times

Even though we may lower the deficit one year, we are still increasing our debt

Where Did the Debt Come From?

Federal Deficit Spending

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($Trillion)Annual General Fund Deficits

We will borrow $7 trillion more

by 2023 because of budget deficits

The national debt has our nation poised to face financial disaster

• At worst, complete collapse is possible

• At best, we will experience significant economic struggles

• Most likely, we will become a 2nd rate nation for at least a generation if not longer

Why Does the Debt Matter?

First, we will lose the ability to conduct our foreign affairs as we want

Next, we will lose the ability to handle our domestic affairs the way we want

The key factors will be:• Social Security• Trade deficits• Interest rates • Size of the debt

Why Does the Debt Matter?

Factor #1: Social Security

The surpluses generated in the Social Security Trust Fund between 1985 and 2013 totaled about $2.6 trillion

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($Millions) Annual Social Security Surpluses

We have borrowed $2.67 trillion from Social Security to fund our overspending

The Social Security Trust Fund is basically empty

The loss of the Social Security trust fund money is going to magnify the problem of the national debt even more

Social Security Impact

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Annual General Fund Deficits

Between 2014 and 2020, deficits will total between $7 - $8 trillion.

Plus we will need to start refinancing the debt held by Social Security.

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Social Security Impact

Factor #2:Trade Deficits

Imports Wealth Flows Out

ExportsWealth Flows In The wealth of a nation is

fundamentally determinedby GDP growth and the

balance of trade

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Foreign Trade Balance 1960 - 2013 - $ Billions

More than $12 trillion of our wealth has flowed out of the country since 1990.

The United States is a much poorer country not only because of our debt, but also our trade deficit

This 1-2 punch has resulted in:• Decreased economic growth• Increased dependence on other countries• Fewer options for resolving our financial

situation

Trade Deficit Impact

Factor #3: Interest Rates

In 2014, interest payments on our debt were greater

than the budgets of ten government

departments.

$429 Billion

Interest

CommerceInteriorEnergyState

Justice

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Our $429 billion interest payment was abnormally low

• 2.1% interest rate

What if those interest rates rose to a more reasonable rate?

• 4.8% (2007 rate)

Our interest payment would balloon to $980 billion

• How would we pay it?

Interest Rates

• Raise taxes - Will result in economic slow-down

• Cut programs - Will mean far fewer government programs• Will affect the poor the most

• Borrow more money - The easiest short-term solution• This creates a financial death spiral• It’s what we’re already doing

• Print more money - Leads to inflation or even hyperinflation• Possible to inflate our way out of debt• We will also inflate away our retirement funds and other savings

• So we all end up paying the debt anyway

Paying an Extra $551 billion

Remember this chart?

Factor #4: The Size of the Debt

Our future borrowing far outpaces our economic growth

We cannot keep borrowing money

Creditors at some point will either lose confidence that we can service our debt or they will take advantage of how dependent we are on further credit

• They will raise their interest rates• They will stop loaning us money• They will add conditions to continued

assistance

If we don’t successfully handle our debt, we face economic disaster and the potential collapse of our government

The Size of the Debt Impact

“The most significant threat to our national security is our debt.”

– Admiral Mullen, former Chairman, Joint Chiefs of Staff

Our need to borrow money from foreign creditors will cripple our foreign policy• For Example: China owns 11% of our debt• What if they refused to refinance it unless we cooperated with their policy goals? (Hong

Kong – December 2014)

The lack of Social Security funds will increase our borrowing

Rising interest rates and the political climate will cause us to borrow even more money rather than implement any painful solutions

As our debt balloons, the United States will have to go hat-in-hand to foreign nations for financial assistance

• Creditors will consider us to be a riskier investment and demand higher interest

Eventually, creditors will only provide financing if we agree to certain financial conditions in exchange. We will then have lost control of our domestic policy

• It is also possible that our creditors will refuse to lend us money anymore. This will result in our economic collapse

Our Future if Nothing Changes

At best, if we act now, we will avoid most of the pain our debt can cause

If we delay taking action, we will become a second rate nation for at least a generation

At worst, our economy and government will collapse

Our Future: Best & Worst Case

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.”

– Alexis deTocqueville

If our country decides now to rein in our debt, there is a chance we can miss complete disaster

• There will still be difficulty and hardship• The federal government will have to act responsibly and

courageously

Unfortunately, our history of deficit spending proves that sound governance won’t happen until

• We each decide to choose the greater good over personal interests and

• Our system of government gets additional checks and balances• to make increasing our debt a last-ditch action, not the

easiest way to get re-elected• We need a Constitutional amendment of some sort that

restrains federal spending

Is There Any Hope?

• Study the national debt more fully and see for yourself

• Start demanding a solution!• You don’t have to know the best solution to demand one

• Go to www.250More.org and sign our voter pledge

• Download this presentation from the 250 More website and share it with friends, family and other groups• Actively look for speaking opportunities• Sign up for the 250 More speakers bureau on-line

What Can You Do?A Lot!

• Set aside party loyalty and support anyone with an effective solution• This is not a political issue, it’s a national threat• No matter what your dream for the future is, none of us will get it

unless we act now to solve the debt

• Contact your state and federal representatives aggressively• Twice a month and whenever there is a chance for them to act• Let them know that you are demanding a solution• Let them know that a workable solution to the national debt is

the issue that will determine your vote

What Can You Do?A Lot!

• Demand in any way you can that the national debt becomes our nation’s top-priority issue and that it get dealt with as soon as possible• Write letters to the editor• Speak up at town hall meetings

• Support any and all movements that are working to address the debt issue• Groups working with Congress• Groups working by avoiding Congress

• Article V of the US Constitution

• Donate to 250 More or any other national debt organization• (Think of it as a way to save all your other investments)

What Can You Do?A Lot!

14 cents out of every dollar our federal government spent in 2014 was borrowed

Our national debt is increasing at a rate of $1.69 million/minute

Every increase in our national debt is a tax on the next generation for benefits we enjoy

• Is that the legacy you want to leave your children and grandchildren?

The national debt is a crisis of huge proportions• We don’t directly feel the pain of it yet• When we do, it may be too late to fix• Certainly, the longer we take, the worse the solution will be

We, the people, must demand a solution

Closing Facts

"I wish it were possible to obtain a single amendment to our Constitution. . . an additional article taking from the Federal Government the power of borrowing."

Letter to John Taylor, 1798

“I sincerely believe... that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”

Letter to John Taylor, 1816

“And to preserve their independence, we must not let our rulers load us with perpetual debt.”

Letter to Samuel Kercheval, 1816

Thomas Jefferson