As chairman of the Joint Chiefs of Staff from 2007 through 2011, Admiral Michael Mullen was particularly vocal about saying that the greatest threat to U.S. national security was budget deficits. He pointed out that interest on the debt will nearly equal the defense budget and jeopardize the ability to properly resource the military.
In economic terms, the national debt – the sum total of annual budget deficits – now exceeds $22 trillion. The nonpartisan Congressional Budget Office (CBO) projects a deficit of $896 billion for 2019, about a 15 percent increase over the $779 billion deficit in 2018. The CBO predicts deficits will keep rising in the next few years, topping $1 trillion in 2020 and never dropping beneath that that amount through 2029.
Federal debt held by the public is projected to grow from 78 percent of gross domestic product in 2019 to 92 percent in 2029 and 144 percent in 2049, which would be the most in American history. The prospect of such large deficits and debt poses substantial risks, sayeth the CBO.
In case you missed it, neither Democrats nor Republicans seem to care much. Putting the federal government’s fiscal house in order currently commands the attention of few national politicos. They behave like Scarlet O’Hara in “Gone with the Wind,” who reacted to adverse circumstances by saying, “I can’t think of this now… I’ll think about it tomorrow.”
Democratic presidential candidates have presented plans such as Medicare for All, Free College, and the Green Leap Forward. They advocate increasing taxes on the rich to address wealth and income inequality, social problems and any number of other things, but not to reduce deficits and debt. They don’t appear to be worried by deficits and accumulating debt, and seem to think a magic money tree will fund their spending initiatives.
Republicans also usher the idea of taming deficits out of the room rather quickly, accepting bigger deficits in exchange for tax cuts they argue will promote economic growth and fill budget shortfalls over the long term. The theory is that the debt is manageable so long as the economy grows at a faster pace than the feds’ borrowing costs.
President Trump campaigned in 2016 on eliminating the then-$19 trillion national debt in eight years, but the White House spending plan for the next decade calls for adding another $10.5 trillion to the $22 trillion federal debt – and that assumes continued economic growth.
Doing nothing about government red ink shifts the burden to future generations. The theory is that it is wrong for the current generation to enjoy the benefits of government spending without paying for them.
The CBO estimates the federal government will spend more on servicing outstanding debt in 2020 than on Medicaid, and more than on national defense by 2025. Many Democrats and Republicans deny this is a problem, arguing that the U.S. can simply borrow more to fund unrestrained spending. They appear unconcerned that the government’s debt payments may crowd out a good portion of the spending they want.
The Treasury Department’s Office of Debt Management forecasts that starting in 2024, all U.S. debt issuance will be used to fund the U.S. net interest expense, which will be anywhere between $700 billion and $1.2 trillion or more. If this happens, the U.S. will be engaging in the ultimate Ponzi scheme, in which new debt issuance is used exclusively to fund interest on the debt by around 2024.
Out of control spending will haunt the taxpayers for years to come. Obviously, there is no political gain in being a good fiscal steward.
Nota bene what Edmund Burke wrote in Reflections on the Revolution in France in 1790: “Society is indeed a contract. It is a partnership… not only between those who are living, but between those who are dead, and those who are to be born.”