Why is our national debt a problem?

First, not for clarification, but to refer to later; we have to define what debt is. The government's debt is accrued when they run out of revenue from taxes. They run deficits to make up the difference in expenditures and liabilities.

Second, we have to define expenditures and liabilities. Liabilities are the biggest problem right now. These are the "promised" benefits in which must be paid by law, unless they change the law, which we will talk about in a moment. Examples of liabilities are Social Security and Medicaid. Expenditures are the normal day to day budget demands of running government. Expenditures may go down, like if we were not at war the Department of Defense budget would be greatly reduced.

Now that we have established some base points, on with debt.

We must pull from the annals of history and find an economic theory known as Keynesian Economics. The idea is that when an economy starts to slow, or when consumption declines, the government can and should step in and make up the difference. The first true Keynesian president was FDR. He spent wildly during the depression. This spending cleaned out the coffers of the Treasury and they had to borrow or, raise taxes. They did both. By doing both, FDR created the model for the government going into debt. Many business taxes were introduced as well as Social Security.

In creating Social Security, FDR created future liabilities that could only be sustained by continued population growth. The biggest problem is that our children per family has not stayed the same, it has dropped. This drop has exponentially multiplied our problems with Social Security.

The problem with the Keynesian theory is that it should only be used in the short term due to the problems we are now going to face with the size of our national debt. When ever the economy ran into a slump, the government upped its spending, which caused more debt to accrue.

Medicaid and medicare came later at an even greater expense. There exists too many people on these two programs and not enough workers, (dropping family rate). Another liability that is not talked about as much, but should be, is the interest on our debt. These liabilities at some point, will be greater than the whole amount of revenue from taxes by themselves!

This is bad, very bad...

With revenues being overtaken by our liabilities, where will the money come from for government expenditures?

Just like all budget crisis for individuals, we either have to cut spending or earn more. People adjust to their economic standing quite well actually. They are forced to make decisions. The government has sadly not been forced to, but will have to at some point and it is going to be ugly. They will have to do both I'm afraid. Taxes will be raised drastically and spending will almost have to stop. They will have to cut liabilities, meaning that those who were expecting a check from Social Security will either not get one or it will be a half or a quarter of what it would've been. My solution to the reality that social security might not be there when I am old enough to receive it is to never retire or only half retire. These are the types of things that the national debt will eventually cause to occur.

Now I have to stray off the subject to pull in another point. Credit cards. They are great! When we don't have the money on hand to afford something we put it on our card. Works well right? Let's suppose that our card limit is $5000. We want to buy something for $200. If we don't have the money, we use our card and then have to pay at least the minimum amount owed by the card issuer. Time goes by and we pay our minimum and then all of the sudden our payments on our card is $200/ month and we have maxed it out! First of all, we have no money to spend because we don't have any credit left and, remember that $200 purchase we first put on our card? That is not just the value of a one time purchase anymore, it has to be paid every month.

Our national debt actually works the same way credit cards do! We do not know our credit card limit, but we know that the original purchase on our card seems to have broken or worn out and we are still paying for it.

It can be noted that the government already runs deficits, but these are only our current credit card. There are at least $100 trillion in other credit card debts we have to pay from other generations already.

We can change the future reality today by changing our spending habits. Frugality must be introduced back into government. We simply can not afford any more liabilities. This is a major objection to universal health care. No government program has ever made a profit! It is simply just another liability that we can not afford. Just like on a credit card, we have to know our limits. We stay away from maxing out our credit and simply start spending less so that we can pay down our credit card balance.

On a final note, these are the basics. I didn't even explain the effect our debt has on the value of the dollar. In short, the debt can also be looked at as a loan from the dollar. The dollar is valued now, but it only has so much to loan...

The national debts is simply the net accumulation of the federal government's annual budget deficits.

I'd say the biggest reason is it creates inflation.