BUFFALO, N.Y. (WIVB) – The nation’s gross national debt — which includes debt the federal government owes to itself — now stands at over $19 trillion and growing.
“Can’t even comprehend how much money that is,” said Buffalo resident Steve Wise.
That kind of debt amounts to around $60,000 per person, or $163,000 per taxpayer.
Buffalo resident Serena Sims wants to know, “Why are we in so much debt?”
“There’s a lot of people that don’t even make that in a yearly income. That’s kind of crazy to me, “ Sims said.
The debt is money that the U.S. borrows to cover its expenses. It’s money that’s not covered by taxes and other fees.
Bottom-line, the federal government spends more than it takes in from multiple money sources.
Is this a financial time bomb waiting to go off at some point in the future?
Anthony Ogorek, a certified financial planner, says the country could be looking at reductions in discretionary spending if the debt continues to balloon at the rate it’s projected.
“Everything that you’re going to be getting from government is at risk unless the spending gets under control, or we find a way to enhance productivity and grow the economy quick,” said Ogorek, founder of Ogorek Wealth Management in Williamsville.
According to a report by the Congressional Budget Office, debt held by the public is on track to rise from 77 percent of gross domestic product at the end of this year, to 86 percent of GDP by the year 2026.
Economic output is measured by GDP, the total value of all goods and services produced annually in the U.S.
“If you could increase the gross domestic product the debt shrinks,” said Richard Schroeder, chief investment officer and managing partner with Level Financial Advisors in Amherst.
“At current rates, the debt’s growing at something like 7 percent a year, and the GDP is only growing at about 2 percent a year. At that rate, if expenditures stay the same, or increase with inflation, we’re going to get into deeper and deeper debt,” Schroeder added.
While economic growth has been sluggish, interest rates on the nation’s debt are at historic lows.
The U.S., as it stands right now, is nowhere near dangerous territory when it comes to federal debt, but some economists point out that there are good reasons to bring it down.
For example, the U.S. could reach a point where it can’t borrow more money during an economic downturn, and a huge debt load could accelerate inflation.
But most financial experts say there’s a ways to go before it gets to that point.
“Productivity has stalled and nobody really has a good reason why,” Ogorek said. “We don’t know what’s going to drive GDP growth , but I can assure you cutting taxes, assuming we’re going to have a trickle- down effect and the economy’s going to zoom. No credible economist is buying into that at this point.”
Richard Schroeder says there’s an argument to be made that debt has its benefits, as long as it doesn’t become excessive.
“Let’s say we didn’t have the debt, but we still needed to spend the money we’re spending. It’s all got to come out of our pockets, Schroeder explained. “The government debt helps us to operate in a way that we don’t have to kill the economy by taxing people so heavily.”
Taxpayer Nancy Wolf understands there’s no simple solution when it comes to tackling the debt.
“It would take a lot of reform on many different levels to decrease spending and tighten things up,” she said.
During the third and final presidential debate in October, both Hillary Clinton and Donald Trump were asked about the growing national debt.
According to estimates by the Committee for a Responsible Federal Budget, Clinton’s policies could add $200 billion to the debt over the next decade.
But the Democratic presidential candidate told the debate moderator that’s not the case.
“I pay for everything I’m proposing. I do not add a penny to the national debt,” Clinton said. “I’ve made it very clear we are going where the money is. We are going to ask the wealthy and corporations to pay their fair share.”
Donald Trump’s policies could add $5.3 trillion to the debt over a decade, according to estimates by CRFB.
The Republican presidential candidate promises to create “tremendous jobs.”
“We will create an economic machine the likes of which we haven’t seen in many decades,” Trump said. “We’ll have companies that will grow and expand and start from new.”
Richard Schroeder says there’s been “very little” about the debt from both campaigns.
“It sounds like Clinton’s economic proposals would modestly add to the national debt, and there’s the potential that some of Trump’s proposals would add large amounts to the federal debt,” he said.
Anthony Ogorek says the public should not be surprised by the limited attention the federal debt is getting this election year.
“You cannot get elected promising less,” he said. “And part of the problem is us. We expect people to promise us more. And then after they promise us this and we get the bill, we say find some other way to pay for it.”
In the meantime, the national debt continues to grow every second, and some people wonder whether policymakers have the will to actually do something.
“You can’t keep borrowing and not figuring out a way to pay back, or to decrease what you already owe, “ said Serena Sims.
Does the financial picture have to reach a critical level before steps are taken to put the national debt on a sustainable path?
And when will those discussions start to take place?
“I think the more important debates will happen after the election no matter who’s elected when we have a new Congress and we have a president,” said Schroeder. “We see how they work together, and we’ll see whether there’s any will and any ability to compromise between the two sides to actually promote economic growth and to then control our debt.”