Our Kids Are Inheriting a $37 Trillion Problem
With record spending, high rates, and fewer workers supporting more retirees, the bill on the federal debt is coming due - and our kids are holding it.
For decades, we’ve been told the national debt is a huge problem. Phrases like “we’re mortgaging our children’s future” or “Washington needs to budget like a family” have been tossed around so much, they’ve almost become meaningless. Politicians and pundits would trot out the same lines - and voters would roll their eyes, mutter “okay, Grandpa,” and change the channel to something with fewer spreadsheets.
And for a while, ignoring it seemed fine. We didn’t default on the debt. Interest rates stayed low. The sky never fell.
That was then. This is now: the U.S. is carrying far more debt - $37 trillion and rising, roughly 123% of gross domestic product. Meanwhile, interest rates have climbed back up to 4.33% after years of being near zero. Just like rising mortgage rates strain families, higher interest makes it a lot more expensive for the government to borrow.
In fact, we’re now spending more just to pay the interest on the debt than we are on major services like education or transportation. That’s money we can’t use to build anything for the future - because we’re too busy paying off tast.
We’re beginning to see the effects. The bond market is starting to wobble. U.S. credit has been downgraded by major credit agencies, and investors are showing signs of hesitation. When confidence slips, borrowing gets more expensive - and the strain on the budget only grows from there.
The Math Isn’t On Our Side
This would be a challenge in any environment. But we’re heading into it with some major headwinds.
Like most of the world, America’s population is aging. The birth rate is below replacement, which means the number of working-age adults paying into the system is shrinking, while the number of retirees drawing benefits is growing. It’s a slow-moving demographic crunch that’s already picking up speed. Social Security, Medicare, and Medicaid make up a huge portion of the federal budget, and demand for these programs isn’t going anywhere. Because, shockingly, people enjoy not dying and not being bankrupt. Ideally, at the same time.
It’s a tough equation. Fewer people are paying into the system, while more people are taking out of it. And it’s happening at the exact moment when we’re already deep in the hole.
It didn’t always look like this. In fact, from 1998 to 2001, the U.S. actually ran a budget surplus – as has high as $236 billion - four years in a row. The government brought in more than it spent, and Presidential candidates even debated what to do with the extra money. That’s not some fiscal fairy tale. That was only 25 years ago. Back when we had boy bands, flip phones, and a collective attention span longer than six seconds.
So what happened? Turns out that the sky not falling may have had something to do with someone holding it up. Back then, fiscal hawks actually managed to limit spending and restrain debt at a time the economy was booming. The thing is, because disaster didn’t strike, many voters assumed the warnings had been overblown, and discounted the risks as taxes were cut and spending grew to where we are today.
That enabled some… let’s call it ‘magical’ thinking. On the political left, some began promoting Modern Monetary Theory. This says that since the US controls its own currency, it can never run out of money and therefore can run higher deficits to fund public programs - so long as you keep inflation under control. This sounded good, right up until inflation got significantly out of control in 2020, which forced the Federal Reserve to hike rates, which, as we discussed earlier, increases the costs of paying interest on the debt.
On the right end of the political spectrum, some have argued that we don’t need to worry too much because technology - specifically, artificial intelligence - is going to grow the economy so much that it will make the debt irrelevant, no matter what the tax rate is. And sure, AI is already changing how we work, and it may well boost productivity in ways we can’t yet imagine. But betting the entire federal budget on one emerging technology is like maxing out your credit card today because you’re convinced your teenager is going to become the next tech billionaire. Maybe he will. But you probably shouldn’t plan your financial future around it. Hope is not a strategy, even if it makes for a great campaign slogan.
IOUs are the New National Inheritance
Here’s the part that matters most: if we keep ignoring the debt, our kids are going to be the ones stuck with the consequences.
They’ll face higher taxes, because the government will need more revenue just to keep up with interest payments. They’ll experience fewer public services, because more of the budget will be tied up in paying down the past. They’ll grow up in an economy that struggles to invest in the future because infrastructure, education, and innovation will have to compete with a mountain of IOUs. And the programs we rely on now - like Social Security and Medicare - may be unrecognizable by the time they come of age.
They’ll face cuts to systems we grew up taking for granted, unless, of course, we all agree that potholes are just “historical texture,” and that student loans should come with a 50-year payment plan and a free therapy session.
Parenting at the National Level
I’ve written before about how fathers should be a source of stability for their children - how we create the kind of environment where our kids can try new things, fail safely, and grow into the people they’re meant to be. This is the same principle, just on a much larger scale. We owe it to our children to provide a stable economy built for growth. And that can’t happen if we keep electing leaders who are willing to hang the sword of reckless debt over their future.
Right now, we’re acting like future generations don’t matter. We’re spending like it’s someone else’s problem. And that’s not just bad policy. It’s bad parenting. It’s the equivalent of writing a will that consists of unpaid bills, a half-eaten sandwich, and a note that says, “Good luck, champ.”
Look, I don’t pretend to have all the answers. I can’t give you the magical formula of spending adjustments, economic growth, and tax policy that makes this all go away. It’s probably going to require making choices about priorities and programs we’d rather not make. But I do know this: like any family that finds itself deep in debt, we need to start having the tough talks. If we don’t, something is going to give - and we’re not going to like how that turns out.
With all of that said, I’m still optimistic. America still has the most dynamic economy in the world. We’re home to some of the greatest minds to ever exist. And we’ve faced down challenges that were far more difficult and existential than a bad spending habit. If there were ever a country built to overcome a challenge like this, it’s America.
This can be fixed. But it’s going to take hard work and harder conversations. If we want a better future for our kids, we can’t keep pretending the debt doesn’t matter.
One day, when they ask how we handled it, we’ll want a better answer than, “We just hoped it wouldn’t catch up to us.”