Sunshine Sentinel

Florida’s Republican Sen. Rick Scott cautioned his colleagues that the national debt is endangering the health of the nation and urged them to remember the principles put forward by the founding fathers. 

Scott’s warning, stated in a letter to his Congressional colleagues, comes after the national debt has risen to over $27 trillion — roughly $227,000 for every American household. 

Randall Holcombe, economics professor at Florida State University, explained the implications of such a lofty balance of debt. 

“Inflation, year over year from May 2020 to May 2021, was 5%. We can expect that number to rise through the remainder of the year. Inflation was held down in 2020 because of a COVID-related decline in demand, but as things return to normal, demand is increasing and the easy money policies of the Federal Reserve will not put a brake on inflation,” Holcombe told Sunshine Sentinel.

Unfortunately, the inflation caused by national debt and devaluing of the dollar will impact American families. 

“Things will cost more," Holcombe said. "But inflation also reduces the information content of prices, making it more difficult to tell if price increases signify increased scarcity of higher-priced goods or if price changes only reflect rising prices in general. This makes resource allocation decisions more difficult and reduces the efficiency of the economy."

This is one of the reasons that the 1970s economy was unresponsive, as inflation was causing inefficiency, economically speaking. Even strong economies, such as Florida's, will be subjected to negative impacts of national spending habits, Holcombe said. 

“First, (massive federal spending) diverts resources from private spending, which is the source of economic strength, to government spending," Holcombe said. "Meanwhile, COVID-related spending has gone to programs that reduce the incentive for people to work, further hurting the economy. Added to that, deficit spending is adding to the national debt, which will burden the economy into the indefinite future. Regrettably, legislators from both parties have lost any sense of fiscal responsibility.” 

The United States money supply has increased by 40% since the beginning of the coronavirus pandemic. Before the period of high inflation of the 1970s, the money supply had increased by just 13%.

Inflation is projected to rise by over 60% from its pre-COVID low of 1.4% to 2.3% or more, according to Scott's letter.

Scott has recommended that Congress do everything in its power to reduce inflation by decreasing spending and resisting the temptation to raise the debt ceiling.