The Root Causes of U.S. Debt: Understanding the Economic Policies Behind National and Personal Indebtedness
It is a common misconception that the United States government or its citizens are in debt due to overspending, entitlements, or the desire of people to have things without paying for them. In reality, the root causes of the U.S. debt are much more deeply rooted in the economic policies that have been enacted to benefit the wealthy class.
National Debt: The Cumulative Impact of Tax Cuts and Wars
Most of the U.S. national debt is a result of four decades of tax cuts for the wealthy and several extremely expensive wars. These wars were initiated by administrations that chose not to raise taxes to cover the costs. When the government cuts taxes, it does not see an increase in economic expansion that generates enough new tax revenue to offset the revenue lost from the tax cuts. Instead, tax cuts for the wealthy lead to a shortage of tax revenue, causing a deficit. Since the federal government cannot default on its debt, this deficit must be borrowed, leading to a series of trillion-dollar loans given to the wealthy, with the taxpayer footing the bill.
The majority of the trillions of dollars that make up the national debt can be traced back to this pattern of tax cuts for the rich over the past 40 years. In short, the government took out a series of trillion-dollar loans, handed the money over to the rich, and sent the bill to the American people.
Personal Indebtedness: A Result of Inadequate Wages and Rising Costs
While working-class wages have remained stagnant, the cost of living has steadily increased over the same period. This erosion of the standard of living for working-class citizens first eliminates any savings they might have and then forces them to use credit to purchase necessities, such as healthcare and college educations. The result is that a significant portion of the working class in the wealthiest country in the world is essentially the "working poor," surviving paycheck to paycheck, with any unexpected expense leading to debt.
Many U.S. working-class citizens rely on payday lenders or pawn shops for even small expenses, such as a $300 repair bill. This systemic issue is a direct result of inadequate wages, which are the product of the destruction of the right of workers to negotiate fair wages through collective bargaining. Anti-worker "Right to Work" laws have been enacted in at least half of the states, undermining workers' ability to negotiate on their terms.
The Profits of Debt: How the Rich Benefit from Borrowing
The wealthy and corporations profit from the debt in several ways. By collecting interest on the money they borrow, and by paying inadequate wages, they benefit from the debt. Additionally, since the money borrowed was given to them with interest from the people who received the tax cuts that caused the debt, the debt is essentially funded by the very same borrowing that benefited the wealthy. Therefore, the wealthy not only benefit from the debt but also from the borrowing that funded the tax cuts that caused the debt in the first place.
Understanding that tax cuts are paid for from the future labor of the working class, it is clear that people should put an end to them immediately. We are borrowing money to benefit the rich, and the money never gets repaid, only adding to the debt.
In conclusion, the U.S. government and its citizens are in debt because of economic policies designed to benefit the wealthy. This is a problem that requires changes in how we approach economic policies to ensure that the needs of all citizens are met, rather than just those of the wealthy.