We thought it might be helpful this week to re-release our “Fiscal Cheat Sheets,” which outline key economic and fiscal repercussions of government overspending. Please see below for an excerpt from “Consequences,” and click on the document name to view it in its entirety.
Americans have begun to understand there really is no “free lunch”; Washington’s fiscal recklessness has consequences, and these consequences grow exponentially worse with every day policymakers fail to get our nation’s fiscal house in order.
Right now, the government is financing its overspending through borrowing, and incurring debt that will have negative consequences.
As the national debt grows, policymakers will likely contemplate major tax hikes and increasing the money supply to pay our debt with less valuable money.
Tax increases would hamper the economic recovery, and hinder the prospects for future growth.
Increasing the money supply would lead to higher prices and make American families’ savings less valuable.
In March, Moody’s Investor Service warned that, unless the United States reduced its debt, the renowned credit agency would consider downgrading the U.S. debt rating from AAA status for the first time in history.
Downgrading the U.S. debt rating would signal to lenders that the U.S. has a higher potential of default and is no longer the lowest-risk investment. Because of the increased risk associated with buying U.S. debt, investors would likely require a higher interest rate. This would push U.S. interest payments higher, and worsen the country’s debt situation.
Uncontrolled government spending doesn’t just lead to too high taxes and too much debt, it will also impede economic growth – both today, and well into the future.
For more of our “Fiscal Fact Sheets,” check out today’s re-release of “Uncertainty,” and yesterday’s “[Ir]Responsible Governing” and “Unsustainable Spending.”
