Bellarmine’s Up to Us team was able to sit down with Congressman John Yarmuth and discuss his thoughts on our fiscal future. Yarmuth is currently the U.S. Representative for Kentucky’s 3rd congressional district, which is effectively the city of Louisville, and has been since 2007. He is a member of the Democratic Party, and has often been lauded for being bi-partisan.

On a cold and gusty Monday, we went to city hall and asked Yarmuth what he believed to be the biggest fiscal challenge facing millennials today. His first response was the ever-increasing wealth gap. In conversing with him, he stated that this is becoming increasingly apparent in the difficulty young people with degrees are having becoming gainfully employed upon graduation.

Yarmuth made a distinction between the entire national debt, which is to be paid off in the long-term, and the interest on the debt, which comes due annually. He argued that, as long as federal revenues exceed federal expenditures for the year, and for the foreseeable future, the government will be able to run just as most American families do – on credit.

This view on the national debt does seem a bit dangerous; however, Yarmuth continued that most of our nations’ debt is held by American citizens in the form of Treasury Bonds. The American government is the one printing the Treasury Bonds and setting the interest rates. This interest rate paid by the Bonds is often referred to as the ‘risk-free rate’: basically because it has a tendency to stay the same and an investor doesn’t have to doubt the amount returned because the government can always print more money to pay back.

Per Yarmuth’s suggestion, as the American government maintains control over the interest rate paid to its creditors and continues to have the ability to issue new debt through Treasury Bills, if it can uphold the current downward trend of the federal deficit, perhaps our generation will not see the predicted effects of a large national debt.