Children ask questions in a simple and direct manner. It is one of the many things I love about kids. Those of us in the adult population have mastered the art of taking straightforward matters and complicating them. Because our minds have become jumbled from that habit, we are often stumped when children ask us their forthright questions.

There is one question that has puzzled me for a long time and sometimes I wish I could find a child to pose it to someone in plain language for me. We say all the time in this country that our nation is the wealthiest and the most powerful on the planet today, and perhaps in all of human history. That is also how the rest of the world perceives us. A child is likely to ask then: If we are that rich, how come we have so much trouble paying our bills?

We have $36.21 trillion and counting in accumulated national debt. There are a variety of reasons why people sometimes owe large sums of money. Some of the reasons are good, while others are not. Taking student loans to pursue a college degree that enhances one’s future earnings potential is a wise decision. The same applies to obtaining a mortgage to buy a house in an attractive neighborhood. Overseas travel experience is nice to have but it can be quite expensive. Relying on one’s credit card to jet around the world simply for fun, while racking up tens of thousands of dollars of debt in the process, would be extremely unwise.

America accumulated its gargantuan national debt for both good and bad reasons. Investing in public goods such as education, healthcare, infrastructure and national security is expenditure that makes sense. However, it is also common knowledge that a substantial portion of the debt pile can be attributed to waste, fraud and abuse. Apart from the inefficient use of resources, it is indisputable that we have also been living well beyond our means for a long time.

When banks and investors lend money to anyone, the expectation is that the funds will be used for productive ventures, and that the borrowed principal, plus interest, will be repaid within a specified period of time. College students are supposed to take their studies seriously, make their best efforts to graduate within four years (for most majors), and start repaying their loans shortly thereafter. There are all sorts of negative consequences for any student who doesn’t adhere strictly to this timeline, especially when graduation is delayed for a considerable length of time.

In February 2020, the nonpartisan Congressional Budget Office (CBO) projected that the federal government would run trillion-dollar deficits “as far as the eye can see.” What that meant in plain language was that America would keep borrowing to fund its needs and lifestyle, but had no clue when it would be able to repay the loans. Five years after publication of that forecast, both the annual budget deficit and the accumulated debt numbers have grown substantially larger. Our fiscal situation is a lot worse now than it was back then.

A recent Wall Street Journal article says that the U.S. annual budget shortfall will soon rise above $2 trillion on the way to $3 trillion. The deficit-to-GDP ratio is currently over 6 percent and is expected to  top 7 percent for the next decade. Actually, that percentage should be as close to zero as possible. And ideally, we should be aiming for better than zero. Being at zero technically means that we generate just enough economic output to enable us to cover our expenses. What we really should be doing is running surpluses so that over time, we accumulate savings for rainy days. If our economy isn’t growing enough to provide the tax revenues required to meet current expenditures, then the prudent thing for us to do is to look for efficiencies and ways to eliminate some non-essentials from our budget.

As things stand now, we are like the lazy, party-loving undergraduate student who spends lavishly, has been on campus for eight years, and still doesn’t know when he will get his degree. In the case of this indolent young man, it is clearly past time for him to be labeled as a risky borrower. Someone at the bank should call him in for a discussion of his near-term plans. If he cannot provide satisfactory answers, the bank would be wise to cut off his money supply.

Despite its apparent profligacy, America has always managed to sweet-talk its way into obtaining more loans. We tell investors that we have the largest and most dynamic economy in the world, and that with the dollar as the global reserve currency, there is little chance that we would ever default. We tout our enormous resources, both natural and human, to buttress those claims. All that is true to a large extent. But that truth is not unquestionable.

America indeed has enormous economic potential. We have, among others, a continent-size landmass, abundant natural resources, world-beating institutions of higher learning, and a large private sector teeming with innovative companies that have relatively easy access to capital via our vast and deeply liquid capital markets. Additionally, America has long been a magnet for the best and the brightest from all over the world who complement our already sizable human resource pool. These attributes, taken together, are what make our nation the wealthiest.

It is one thing to have all those endowments. What really counts, however, is having the ability to tap the resources wisely and make the best use of them. We all know that there are some extremely gifted people who fail to make proper use of their talents. And we’ve all heard stories of some fabulously rich people who mismanaged their wealth over time and ultimately went bankrupt. Something must not be going right if, despite our enormous wealth, we have consistently been unable to pay our bills without borrowing.

Even more concerning is the fact that we have no idea when we will be able to fully cover our expenses and have something left over to save for our children’s education and our retirement. We should make a serious effort to figure out what we are doing wrong and correct it before the bank decides to call us in for questioning, or worse, cut off our funding.