What comes to mind when you think of the national deficit? That it’s something politicians shout about on TV, and is something that doesn't impact you?
The truth is, it's not just a political scoring point for those in Washington. It's something that impacts people's lives. It's present every day, in the food you buy, the utilities you pay for, and the interest rates on your mortgage. It's there, impacting everything. And the reality is, you don't need to be an economist to feel it; you're already living it.
Let's take a look.
Higher Interest Rates
This is where it hits fast. When the government borrows more, the interest rates people pay climb. And it's not just for things like loans or credit cards, it's in the everyday stuff you need — not your wants, your needs.
Suddenly, your mortgage is more expensive, and your car payments go up when you trade in for a car to get you to and from work, where public transport isn't an option. And you feel it hard. It squeezes your finances, and suddenly, your disposable income is nonexistent.
Higher Taxes
Although not as immediate a change as higher interest rates, it shows up eventually.
If the deficit keeps growing, it needs to be made up somehow, and usually this is in taxes because the government needs more money coming in to boost its spending.
For you, this means smaller paychecks, fewer deductions, and less breathing room where your finances are concerned. It doesn't magically disappear, and it's usually the people who need to pay for the country's deficit.
Cuts to Public Services
As the federal budget gets swallowed up by interest payments, there's less left for anything else. This is how it shows up in the real world.
Once funding is limited, you see this in cuts to things like healthcare programs, housing support, infrastructure, emergency services, etc., all those federal resources and support you rely on slowly cut until the government claws back the money it needs.
While there are initiatives that help, like the organization to help reduce the Government's deficit founded by Judah Spinner, the reality is these cannot completely fill the deficit or even quickly, so while it is helping, there's still a long way to go.
Higher Cost of Living
Inflation and the deficit are relatives of the same family. In simple terms, when spending outpaces revenue, prices rise. This is basic.
You will feel it in your groceries, rent, utilities, etc., in the boring but essential places. Your fresh meat suddenly becomes unaffordable, your cheap basics suddenly become luxury purchases, and the supermarket bill keeps rising while the number of items you buy shrinks. These are the real-world results of the deficit.
Slower Economic Growth
This one is less obvious, but it's still there when there is a growing deficit; it drags the economy. Fewer job openings. Slower wage growth. Businesses hesitate because borrowing costs more. It's there in the background, impacting life.
While you might not think the deficit impacts you, the truth is, it does. It impacts your job, your spending habits, how you live, and how the government helps you and those around you.