My, but they have big plans, these Democrats and Republicans running for president. Some want to spend federal revenue on new initiatives with lofty goals. Others want to forgo federal revenue by enacting tax cuts, also with lofty goals. Only a few candidates remind all of us that … our government can’t afford its current programs and policies.
My, but they have big plans, these Democrats and Republicans running for president. Some want to spend federal revenue on new initiatives with lofty goals. Others want to forgo federal revenue by enacting tax cuts, also with lofty goals. Only a few candidates remind all of us that … our government can’t afford its current programs and policies.
We pause here to praise New Jersey Gov. Chris Christie, who says truths rarely heard in polite company about reforming, and thus rescuing, our federal entitlement programs. A nod, too, to Ohio Gov. John Kasich, who wedged a mention of our crushing national debt — north of $18 trillion and less than a month from hitting its presently authorized legal limit — during a Republican debate. For the most part, though, those who would be president aren’t talking about the crisis of federal finances — let alone about where it leads.
Optimistic politicians, some candidates included, want you to focus on Thursday’s news from the Treasury Department: In the fiscal year ending Sept. 30, your government spent $439 billion more than it collected in revenue. That’s an improvement from the deficits of fiscal 2009-12, each of which added more than $1 trillion to taxpayers’ debt. But all those “Alexander” adjectives still apply to a $439 billion deficit. If you can applaud the addition of $439 billion to the debt, we may not be able to treat you successfully.
Economists use a simpler, better way of thinking about this slow suicide: debt as a share of gross domestic product, aka what the U.S. economy produces in a year. For the last 50 years, our debt has averaged 38 percent of GDP.
After our run of giant deficits, though, the ratio is 74 percent, and will rise sharply. The nonpartisan Committee for a Responsible Federal Budget explains: “Falling deficits have not prevented the debt from growing; rather, they have only slowed down the growth trend. While the debt-to-GDP ratio was essentially stable between 2014 and 2015 and may remain so for the next few years, debt is projected to continue growing faster than the economy over the long run.”
Grind the numbers through likely budget scenarios and our debt outstrips the size of our economy in 15 to 25 years — by 2030 to 2040. Granted, a 100-percent ratio of debt to GDP isn’t of Greek magnitude (about 177 percent last year). But it’s close enough to the outer Greek Isles that you can smell grilled eggplant moussaka. Similarly, 15 to 25 years is mighty close, given how impossible it has been for the U.S. to even begin lowering its total debt. The Greeks, too, spent many decades borrowing their way into disaster (and, yes, perfecting the moussaka).
We’d love to hear candidates for president arguing about how to end this menace to America’s future — by reining in entitlement spending, by raising taxes, by selling off a few states to a thriving Norway … OK, not the sale to Norway. But honest talk from would-be presidents might help prevent the doom our children and grandchildren will inherit.
We wonder if this emergency exists because no discernible emergency exists: America isn’t yet the United States of Illinois, unable to pay its bills as they come due. Our national government instead has borrowed enough money to create the mirage that this is sustainable.
That will change abruptly when, for example, the expected depletion of Medicare’s hospital trust fund in 2030, and of Social Security in 2034, force major tax hikes or slashes to benefits. The Social Security Disability Insurance fund is on track to run dry late next year. Expect a taste of the bigger blame games to come: Why did our politicians let this happen?
Because the rest of us didn’t demand fixes, that’s why. Our last few presidents and Congresses have talked about the coming crack-up, filled the air with swell promises — and done next to nothing.
We wish we had assurance that the next president will tell the next Congress that their reckoning has arrived. No such assurance. Seven weeks ago — long before Tuesday night’s Democratic debate and aspirational spend-a-thon — our confreres at the Washington Post Editorial Board neatly synthesized (under the headline, “It’s the budget, stupid”) the vacuum facing America’s voters:
“The increasingly populist, decreasingly sensible election season discourse in this country is veering far away from practical issues — such as how best to raise and spend money for public purposes at the federal level — that ultimately determine the economic well-being of Americans and, indeed, the world. Instead, the ostensibly most powerful nation on Earth has a federal budget patched together out of temporary law and borrowed private savings — and all of the people who aspire to lead that nation are talking about other things.”
That will change if all of us squeeze these candidates to debt. We might rivet their attention if every voter who hears a presidential contender suggest new spending or new tax cuts would rise up and ask, “Given that we’re broke, how will you pay for that costly proposal?”
The candidate will dodge. At which point all of us remind him or her of the fastest-growing category of federal spending, a number that will more than triple from $218 billion in fiscal 2015 to $755 billion in fiscal 2025. That’s the interest we’ll pay on our national debt, our taxpayer debt. Unless we vote otherwise.