[T]he consequences of our debt are not just in the dim and distant future. We are already feeling the impact. And unless we do something to bring debt and spending under control very soon, it is going to get rapidly worse.

Government borrowing tends to crowd out private investment, because a dollar borrowed by the government is a dollar no longer available for private use. This leads to a smaller capital stock and therefore to lower economic output than would otherwise be the case. Moreover, businesses are forward-looking when they make decisions about whether to invest, expand and hire. When businesses look at our debt, they know that it will eventually have to be repaid, meaning they will face higher taxes, higher borrowing costs and the threat of inflation.

This is costing us today in terms of jobs and economic growth. Consider: The International Monetary Fund looked at the relationship between federal debt levels and economic growth, concluding that, from 1890–2000, those countries with high debt levels consistently experienced slower economic growth than those with low debt levels. Similarly, Carmen Reinhardt of the University of Maryland and Kenneth Rogoff of Harvard concluded that countries with a debt totaling more than 90 percent of GDP have median growth rates 1 percent lower than countries with a lower debt, and average growth rates nearly 4 percent lower.