On Friday, October 25, 2019, the U.S. national debt surpassed $23 trillion, per the Treasury Department and the Peterson Foundation.

Why it matters: The national debt met the $22 trillion mark just nine months ago and has soared $3 trillion since Trump took office, when it rested at $19.95 trillion. The White House projected in July that the federal deficit would surpass $1 trillion this year — the first time since the four-year period following the Great Recession.

Many people think of debt as an inherently bad thing. It’s not, provided you make the distinction between the kind of debt you and I might have as individuals and the kind of debt associated with organizations, of which the US is a prime example.

That’s not to say that debt cannot be a bad thing, but it has to be seen in the correct context. The principal difference of debt, as it applies to you and me, is we have a finite life expectancy. An organization, such as a large company, or a municipality, or the US, does not have a defined life expectancy. That alone puts a different dynamic in place.

It’s natural for us to think the best outcome for the US is to have ZERO DEBT. But if we think that, we’re applying the dynamics that apply to us as individuals and ignoring the dynamics that apply to states and municipalities etc. In that context, debt is a valuable tool that in it’s absence, would mean another form of gloom and doom.

It’s similar to debt that corporations use. If you and I want grocery stores, gas stations, restaurants and banks within a convenient distance from where we live, someone at a corporate level has decided it’s in THEIR best interest (think ‘profits’), to put them where it’s convenient for us. Most likely they’ve borrowed some of the necessary money (debt) to put a grocery store, a gas station, or a bank where it’s convenient for us.

You and I as individuals might die or move away, but in our place will be others who will take our place as consumers, as taxpayers, and contributors to their ‘profits’. Earlier in my life I was privileged to serve as board chair for a not-for-profit, member only golf and country club. Our board decided we needed a major renovation of the club building complex. We could assess every member $5,000 and pay to have it happen, or we could borrow the money and increase the dues by $30 per month. $30 per month ($1 per day) was far more palatable than a one time payment of $5,000.

A $23 trillion national debt does not automatically spell doom for us or for our children and grandchildren. It does however increase the existential risk it will become a problem down the road. That means it deserves attention and/or that potential steps must be taken BEFORE it becomes a real threat.

Last June I came across something by a Rebecca Falconer where she reported the following:

Large budget deficits would see the U.S. federal debt swell to “unprecedented levels” over the next 30 years if current laws remain unchanged, the Congressional Budget Office said as it released a new report Tuesday.

By the numbers: The CBO forecasts federal debt to rise from 78% of gross domestic product (GDP) in 2019 to 92% in 2029 and 144% in 2049.

“That level of debt would be the highest in the nation’s history by far, and it would be on track to increase even more. The prospect of such high and rising debt poses substantial risks for the nation, and presents policymakers with significant challenges.”  —  CBO report

Agency director Phillip Swagel said in a statement the prospect of such large deficits over many years, and the high and rising debt that would result, “poses substantial risks for the nation and presents policymakers with significant challenges.”

The challenge you and I face as individuals is all this has economic and financial implications across the board. What will it do to interest rates? How will it effect the ability of my children to purchase a home if that’s what they choose to do? How will it effect my future tax rates? If I’m now retired, will it cause me to run out of money before I die because I can no longer afford to live?

And in the context of my chosen profession as the author of an online school designed to train your brain about retirement, what will it do to your ability to thrive and survive during what will likely be a 25 year or more trek into the uncertain financial future that we all call retirement?

Tony Kendzior \ November 8, 2019