Our country’s challenges are all affected by financial considerations; and rightfully so.

Financial susceptibility, weakness and potential crisis are our biggest threats not only to us as individuals and families, not only in dollars, not only inconvenience, but to our country’s continued existence. Most of the countries perceived as enemies realize their best method to eliminate or take command of our system is through economic strategy not direct imperialism. Consequently, we must not only be vigilant but proactive in that regard.

The media and political environment have elevated this concern in our minds. As a result, many have requested an explanation of this threat and how it’s affected by our country’s main issues.

Deficit spending, negative balance of payments, immigration and foreign imperialism are the main issues whose financial ramifications and consequences affect this threat. Quality decision-making regarding each requires understanding its nature, accepting realities, and considering potential solutions; especially those out of the box.

An initial danger lies in our willingness to increase our national debt through annual deficit spending. This acceptance stems from our not understanding its dangers, our not caring and others who benefit from the deficit spending.

Deficit spending requires the government to acquire dollars to fund it. Our only sources are to print more money or sell government bonds. The first is directly inflationary and the second requires a generous interest rate to convince an individual, institution, foreign entity, or foreign country to buy them.

This deficit is beyond significant. $1.8 trillion in 2024, adding to a total debt of $36.8 trillion. Yes, that’s trillion. One trillion is one million-million dollars. The mere size of it, so many zeros, is almost beyond comprehension, unfathomable and contributes to many of us not caring. We don’t think it affects us or understand its effect.

The interest cost on the 2024 debt was $952B; more than the budget for national defense. 24% of the national debt is owned by foreign interests, hence 24% of the annual interest payment leaves our country. Interest payments cannot be spent on any other governmental program, regardless of its validity or necessity.

In our country the economic multiplier effect and domestic transactional effect multiplies any dollar generated 3-5 times. Literally meaning $1 will turn into $3-$5 circulating, generating profit, jobs, tax revenue, and economic growth in our country. The consequent negative of the 24% of interest leaving the country ($229B) actually costs us between $687B and $1.14T because we lose the ability to multiply it.

The government’s having to borrow more and more increases demand for loans logically increasing the price of money (interest rates), serving to further increase our annual interest obligations. We are, in effect, borrowing more money to cover our interest obligations much as a pyramid scheme functions.

Interest is the second largest spending category; only Social Security being higher. Without change, interest rates will soon be the largest; a category serving no function in the betterment of our economy or its people.

Whether we like it or not, annual deficit spending is not a sustainable occurrence. Neither is failing to develop a plan to gradually eliminate the entire national debt. Each of us and our families have learned we must live within our means. Debt must not only be paid back, but the consequent obligated interest guarantees a reduction in our level of spending in the future which is an economic occurrence negatively affecting jobs, wages, and tax revenue. The government is no different.

One might argue that those holding our debt can’t repossess our country, so why worry. If we should default the value of the dollar decreases and ceases to be the international currency of choice. This would make international export transactions more difficult and increase our susceptibility to other countries manipulating currency values.

Deficits and debt negatively affect our ability to respond to: imperialistic activity against other free world countries as well as domestic and international humanitarian needs caused by weather, earthquakes, drought and other natural events.

Perhaps more significantly, deficit spending causes domestic inflation because the government increases the amount of money in circulation without an accompanying increase in productivity.

In Reality: Inflation isn’t caused by consumers spending too much, but rather by governmental excess spending. The Fed’s strategy of raising interest rates to curtail inflation has proven ineffective in the modern economy. It only affects individual’s purchasing vehicles and homes having no effect on food, energy and other consumables which comprise 43% of a family’s budget.

Out of the Box Solution: Assess a fee based on adjusted gross income, before any deductions, that goes directly and solely toward reducing the deficit. When the deficit is gone, the fee is gone. The negative is that this is in effect a tax. The positives are:

• It applies to all taxpayers based on their actual income not their taxable income,
• The taxpaying public will put pressure on the government to produce a balanced budget each year,
• It should increase the number of people understanding and caring about the deficit,
• When the deficit is gone income tax rates could be reduced resulting in increased economic activity.

The next column will outline how deficit spending, the negative balance of payments, immigration and foreign imperialism all affect the national debt, their realities, and possible solutions. It’s our personal responsibility to develop a knowledge-based opinion in their regard.

Bryan Whiting feels most of our issues are best solved by personal responsibility and an understanding of non-partisan economics rather than government intervention. Comments and column suggestions to: bwpersonalresponsibility@gmail.com.