August 14, 2022 - 9:00 pm
The country’s approach to its bloated national debt resembles a toddler when faced with a plate of peas: Close your eyes and pretend it doesn’t exist.
Earlier this month, officials with the U.S. Treasury released new guidance about expected quarterly borrowing. They now project the government will borrow $444 billion from July to September. That’s up from the previous estimate of $182 billion.
If the United States were actively fighting a world war or facing an unprecedented event — such as the coronavirus — this level of spending might be justified. But there is no such crisis, even with the fragile economy. Ironically, exorbitant spending caused one the of economy’s main problems, excessive inflation.
According to the U.S. Debt Clock, the national red ink is now more than $30 trillion. In 1980, it was just more than $900 billion but on its way to $5.7 trillion in 2000 and $20 trillion in 2016.
That trajectory is deeply troubling, even after accounting for a growing American economy. In 1980, the debt-to-GDP ratio was under 35 percent. In 2000, it had increased to 56.8 percent. Now, it’s more than 123 percent.
These deficits don’t reflect a revenue problem. As of August 1980, the government had collected $510 billion in revenue for the year. In August 2000, it was $2 trillion. So far this fiscal year tax collections have topped $4.4 trillion. Did anybody think the federal government didn’t spend enough money 20 years ago?
The problem resides in the fact that members of Congress spend money like Monty Python’s Mr. Creosote dines. No matter how quickly tax revenues increase, the government’s appetite for more spending grows even faster.
That’s the nature of entitlement spending. The largest items in the budget are entitlements such as Medicare, Medicaid and Social Security. So far this year, the federal government has spent $2.6 trillion on those programs. That far outpaces military spending of $754 billion over the same time frame. This year, less than 15 percent of the government spending has gone to the military.
Year to date, interest has cost more than $440 billion. The time is soon coming when the country will spend more servicing its debt than on defense.
Ignoring the problem doesn’t make it less unsustainable. A financial reckoning is coming. That could mean more inflation, as the currency is devalued to pay down the debt. That could mean higher taxes or spending cuts.
A prudent country would take action now to limit future pain. Unfortunately, the majority of citizens seem content with leaving this problem to future generations.