Why Doing Nothing About Our Crippling Federal Debt is Unfair to Young Americans
The young students from Florida who are forcing Washington policy makers to take a hard look at gun safety regulations are making history. Their passion and activism are what’s needed to shake up the Washington establishment and force them to respond to what the people want instead of what the special interests want.
What these young activists are saying is that our elected leaders have let them down and have failed the basic functions of government — providing for the common good and leaving a better world for the next generation. And, just as with the issue of gun safety, politicians have failed to listen to young people on a host of issues that will affect their future and their ability to get ahead. Congress just isn’t listening to the concerns of young people.
Take, for example, Washington’s flawed and fraudulent budget process that continues to saddle the next generation with massive deficits and debt. I realize it’s a dry, wonky issue that people would rather not think about. It’s always more fun to keep using that credit card on a Saturday night than it is to think about the bill you’ll get next month.
But the bill is coming due, and it’s a big one. If budget reforms aren’t enacted soon, our growing debt will rob us of the resources necessary to adequately address critical issues like health care, infrastructure, education and elderly services. As more and more of the federal budget is consumed by interest payments on the debt — and as the debt makes up a larger and larger share of the nation’s gross domestic product (GDP), the total value of goods produced and services provided in a country during one year — we simply won’t have the money to make needed investments in the economy to maintain a standard of living for young people equal to the one their parents enjoy today. Instead of a life of upward mobility, my kids could be looking at a downward economic spiral where hard-to-find jobs pay less, homes cost more and “luxuries” like cars, vacations and even iPhones are out of the reach of many.
I’m not trying to be an alarmist. I’m taking a cold, hard, honest look at the latest federal budget numbers and what they mean for the future. And even though the latest figures are a product of the Trump Administration, the dire budget emergency we find ourselves in today is the product of the neglect and dishonesty of both political parties over many, many years.
According to The Committee for A Responsible Federal Budget (CRFB) — a non-partisan, non-profit organization that provides an independent analysis of the federal budget — here’s the situation:
- The current national debt of $14.7 trillion as a percentage of GDP is higher than at any time in history outside of World War II and immediately after, and the annual deficit is a record $665 billion. Both are growing unsustainably.
- Recent tax and spending legislation passed by Congress just since June of last year has made a bad situation much worse, adding up to $3.6 trillion more to the debt.
- The CRFB projects that under current law, trillion-dollar deficits will return permanently by next year. Under potentially more realistic assumptions (that temporary tax cuts will be made permanent, for example), the country will be facing a $2.4 trillion deficit by 2028, nearly four times what it is today.
- Currently, our public debt is 76 percent of GDP. In other words, the value of everything the country produces in a year is more than enough to cover the debt if we had to pay it all off. But, investors and economists get a bit nervous when the GDP ratio exceeds 77 percent. Based on the latest budget figures, the public debt could reach a staggering 113 percent of GDP in ten years. That’s bigger than the economy itself.
- Annual interest payments on the debt ($310 billion) are now the fourth largest expenditure in the federal budget, behind Social Security, Medicare and Medicaid, and defense. It’s like paying only the interest every month on your credit card — it keeps you solvent but does nothing to reduce the overall debt and takes away money you could be spending on other things.
- As our debt grows and interest rates rise, those debt payments are expected to rise faster than any other outlay in the federal budget, according to the Congressional Budget Office, reaching $761 billion in 2028, or more than 12 percent of the entire federal budget. That’s more than we now spend annually on education, transportation, the environment, housing, foreign aid and science combined.
How did we get here? The CFRB analysis makes it clear that both political parties have employed a whole host of gimmicks, rosy scenarios, fudges and pie-in-the-sky projections to mask the true effects of their budgets, year after year. Like a three-card Monte dealer, our political leaders have fooled themselves and the public by hiding the truth of their profligate spending policies and unrealistic proposals to make it seem like the debt and deficits will improve or not get any worse.
This year, for example, the Trump Administration is suggesting that its massive deficit spending will be offset by an annual 3 percent growth in the GDP. No reputable economist shares this view. At most, economists are projecting growth of around 2 percent (a 1 percent growth in GDP produces about $300 billion in annual revenue for the government). So, you can see why politicians like to push the higher, unrealistic numbers. But they’re kidding themselves, and the voters.
We simply cannot continue on this path. One solution suggested by the CFRB is to require Congress and the president to use economic data and projections from nonpartisan sources, like the Federal Reserve, when preparing budgets. But don’t expect the two parties to agree to such a move. Without independent, non-partisan leadership in Congress, the budget games and gimmicks will continue, the debt and deficits will grow, and the nation’s young people will be the ones paying the heavy price.