For 50 years, the U.S. government has been spending more than we earn –– selling Treasury bills and bonds to make up the difference. We’re the world’s most robust economy; we always pay our debts; we’re a safe place for other countries (and our own citizens) to park their money. All good until now. However, in less than a decade, we’ll be spending more to service our past debt than we’ll be investing in our future. Interest payments will inevitably consume funds needed for essential programs. (CRFB, 5/17/18)
In 1974 debt was 24 percent of GDP, (gross domestic product), now it’s 74 percent. Among industrialized nations, only Italy has a higher debt ratio. The bipartisan Congressional Budget Office projects that in 10 years the national debt will be close to 100 percent of our GDP. (Council on Foreign Relations, 5/31/18)
The national debt is almost $21 trillion. Hard to grasp, but we can try. Visualize a $1,000 bill (Grover Cleveland’s picture). Imagine a stack of those $1,000 bills 63 miles high. That’s $1 trillion. If you earned $40,000 a year, it would take 25 million years to earn $1 trillion. Annual deficits are predicted to breach the $1 trillion mark each year starting in 2020. (Council on Foreign Relations, 5/31/18) This rapid rise of the national debt is unprecedented.
Fixed expenses (entitlements like Social Security, Medicare and Medicaid) comprise 62 percent of the federal budget, and those expenses are increasing with an aging population. That leaves only 38 percent of the budget as discretionary spending. Unrestrained military expenditures currently consume half of that. Interest on the debt takes another 22 percent. Congress has less than 30 percent of the discretionary budget to fund transportation, education, veterans, basic research, environmental protection, agriculture, justice, and foreign aid commitments, – all necessary to support functioning communities and maintain our global standing.
Without adequate tax revenues, Congress looks to the discretionary budget to “balance the budget.” If expenditures for military and debt service are not reduced, anticipated federal funding to local governments are not assured. About ten percent of Union County’s budget, almost $4 million dollars, is from federal grants. Because state and local governments must balance their budgets annually, if federal dollars disappear, essential services for mental health, impoverished children, infrastructure repairs, public safety and victim assistance are reduced or eliminated.
We also need an economic cushion to address natural disasters, military conflicts and financial downturns. We’re approaching a tipping point where that “rescue money” will not be available. Equally troubling, we spend only one of every ten dollars on the children who will be inheriting our monstrous debt, while elders consume half our budget. (CRFB 5/17/18)
We’re a nation of consumers. Our consumption of goods and services comprise 78 percent of our GDP. (The balance, 6/17/18) If individual Americans are prosperous, the economy benefits. But half the recent tax cuts go to the upper 5 percent, who already have more money than they can ever hope to spend. Only 20 percent of individual tax payers will receive more than a $100 benefit from the new tax bill. (ABC News 5/22/18) Corporations, identified as the essential engine of a growing economy, have spent 35 times more of their reduced taxes on stock buy backs than on promised bonuses and salary increases. (Newsweek 4/10/18) Fiscal benefits of Trump’s Tax Cuts and Jobs Act will disappear by 2020. Tax reform should grow the economy, not the debt.
Politicians win elections by promising to create jobs. They lose elections by voting to raise taxes. As a result, Congress has little incentive to reduce the deficit. That must change. We have an ethical obligation to pressure the president and Congress to reduce deficits by curbing entitlements, prioritizing tax subsidies and raising taxes on the wealthiest. Otherwise, interest on the nation’s debt will consume the budget. We will be reviled by future generations as selfish and foolish spendthrifts whose legacy of insurmountable debt destroyed their dreams and imperiled their security.