Republicans in Congress are proposing cuts to many programs that benefit Americans: Social Security, Medicare, Medicaid, the Affordable Care Act, etc. They cite the national debt, currently over $34 trillion, as the reason we must reduce that debt. If we don’t, they’ll say, we’ll leave an overwhelming burden for our grandchildren.
You might share that concern.
Here’s good news! Part of our national debt was paid off last week (and every week). Someone at the Federal Reserve sat at a computer keyboard and changed some numbers on an accounting ledger. With that, some of the debt was retired.
What we call federal “borrowing” involves using a computer to transfer existing dollars from a non-interest-bearing account at the Fed to an interest-bearing account (a government bond), much like your bank might transfer dollars from your checking account to a new CD account. When the bond matures, the computer is used to transfer the dollars back along with interest. Neither taxpayers nor grandchildren are involved when that happens.
The national debt is nothing more than the sum total of all U.S. government bonds, some of which might be in your retirement portfolio. (Your heirs will not view them as a burden!) If Congress thinks we have too many bonds, they can tell the Treasury and the Fed to stop issuing them. Then, they will gradually disappear from your portfolio and from that scary debt clock.
Congress should stop worrying about non-issues and start serving their constituents instead of their corporate masters.
Tom Olin
