Ask anyone who owns a business what happens if you borrow and spend more than you take in as revenue.
After your listener has a good chuckle, she will undoubtedly tell you that you won’t have that business for very long.
Then ask her what happens if the government behaves that way — borrowing and spending, constantly, for years, without any plan to stop and continually spending more than it receives in revenue.
Until recently, the response might be, “Nothing. The government will just borrow more. We never repay the debt, so it’s not a problem.”
In the last 20 years, the U.S. has permanently increased its statutory debt limit 14 times. The federal government’s borrowing authority has soared from $4.145 trillion to $16.395 trillion — nearly quadrupling the government’s ability to go further into debt.
Year after year, policymakers in Washington have warned of our dangerous fiscal trajectory, all the while voting to raise the debt ceiling again and again.
And now the fact is undeniable: We are in the throes of a global debt crisis — a debt crisis in the U.S. that because of interconnected and overlapping markets now encompasses parts of Europe, Great Britain and Japan. Misery loves company, or so it would seem.