The $20 trillion national debt is one of the four major abuses of the federal government that the Convention of States Project has identified.
Everyone who manages household finances knows that a large, uncontrolled debt can cripple a family's finances. But some Americans still wonder: why is the national debt so bad?
It's difficult to comprehend $20 trillion. To most people, it's just a number. But the ballooning national debt will have a significant negative impact, one that could lead to a total financial meltdown.
As Paolo Mauro explains at the US News and World Report:
Living with high debt is living dangerously. When government debt is large, a rise in interest rates causes total borrowing costs and thus the deficit to increase substantially. As larger deficits are financed, the debt also swells. Investors worried about possible default or a spike in inflation will demand even higher interest rates, creating a vicious circle.
Examples of such "self-fulfilling debt crises" have occurred recently. A sudden loss of confidence in Italy and Spain led to a temporary interest-debt spiral in late 2011 and mid-2012. Although measures by the European Central Bank calmed the markets and default was avoided, higher borrowing costs were transmitted to the private sector, further dampening economic activity.
Just like in a household budget, a growing national debt can lead to a viscous cycle that's almost impossible to escape. If we want to save our children and grandchildren from the coming financial crisis, we must act now before it's too late.
An Article V Convention of States is called and controlled by the people acting through their state legislatures. A Convention of States has the authority to propose constitutional amendments that force the federal government to get this nation's finances under control.
These amendments can include a balanced budget amendment, but the COS Project's plan also allows for taxation caps and spending reform.
The solution to our country's fiscal woes doesn't lie in Washington. It lies in the states, the people, and Article V of the Constitution.