'The Titanic Is Headed to the Iceberg': Skyrocketing Debt Has US at a Crossroads
- [Ben] --rise, thanks toCongress passing legislation
to suspend the debt ceiling.
As a result, in March, thedebt hit 21 trillion dollars.
- I fear that it might takeanother financial crisis
before Congress acts.
But then, it might be too late.
- [Ben] The HeritageFoundation's Stephen Moore
says D.C. is in amidst of abipartisan spending spree.
- We've seen a racketing of our debt,
especially in the last 10 years,
where Obama took the debtfrom 10 to 20 trillion.
- If the debt paymentscontinue to rise and rise,
do you see them gettingbigger than major programs
like the military?
- Well, here's the thing.
I mean, the most importantthing in controlling the debt
is to grow the economy.
That's the advice thatI gave to Donald Trump.
- [Ben] Trump's Chief Economic Advisor,
Larry Kudlow, agrees.
- What drastic actionsare you recommending
to stop the rising debt thatdoesn't damage the economy
or cause interest rates to spike?
- I don't think, by the way, there's any
particular relationship betweenthe debt and interest rates.
But, I want to reduce thedebt burden on the economy.
So, growth, you've got debt, numerator,
Get that GDP up.
- [Ben] The gross domesticproduct is the value
of U.S. goods and services used to examine
the nation's overall economic health.
Kudlow recommends growingthe economy to the max,
so that the governmentbrings in more money
to make the interest payments on the debt.
- The trick is, get thatratio as low as possible.
And I don't we're in adanger zone right now,
but I'd like to see it come down.
- [Ben] And rising interestrates can be very expensive
for Washington and tax payers.
Then government paid outmore than 450 billion dollars
in interest payments on the national debt
in each of the last two years.
If rates rise just a half a point or so,
that could add another 70 to100 billion dollars or more
to those payments every year.
And Moore points out, thatwill add up over time.
- If the interest rate goesup a quarter of a point,
or let's say half apoint, what kind of impact
will that have on paying off the debt?
- So, in every onepercentage point increase
in the interest rate,increases the debt payments
over a decade by a trillion dollars.
So we're talking aboutreally large numbers.
- [Ben] Moore recommendsone way to slow down
the sky rocketing debt,is to reform programs
like social security and Medicare.
Plus, delaying the retirement age,
because people are living longer.
- We've known for 30 years that
the Titanic has headed to the iceberg.
And social security and Medicare,
we know the American peopleare aging, I'm a baby boomer,
there's 80 million of us.
In the next 10 or 15 years,we're gonna stop paying taxes,
and we're gonna start collecting
all these government benefits.
It's not gonna work.
- Bottom line, this is a long run problem
that neither party is addressing.
In the meantime, the government won't face
any limit on borrowing until March.
Ben Kennedy, CBN News, Washington.