Mitchell Nemeth – Foundation for Economic Education, September 17, 2019
There is hesitation among the political class as to what must be done to pay down and eliminate this debt.
At around $22.5 trillion, the United States national debt sits at 106 percent of Gross Domestic Product (GDP). There is no disputing that this gigantic debt will someday become due and payable. However, there is hesitation among the political class as to what must be done to pay down and eliminate this debt.
Continual Spending Increases
Progressive lawmakers have largely refrained from discussing this liability, preferring to claim that the United States can continue to fund exorbitant government programs. Conservatives have unsuccessfully, on numerous occasions, attempted to limit federal outlays. With each failed attempt, conservatives instead continue to vote for spending increases. At the National Review, Michael Tanner writes,
there is no effort to prioritize or make the difficult choices of governing, there is only…more.
If there is any takeaway from these unsuccessful attempts to reduce spending, it is that federal spending has subsidized numerous projects or programs, which have grown dependent on the federal government. There may be many good uses of federal funds, but this does not provide lawmakers with a “Get-out-of-jail-free card.” For now, lawmakers continue to spend as if they are children in a candy store with no limit on their parents’ credit card. At some point, lawmakers must address the underlying problem: federal spending.
Apathy and Unfathomability
Lawmakers are representatives for their constituents. This goes without saying, but lawmakers are unlikely to address the ever-increasing national debt until voters demand action. What remains unfathomable to many voters is how much money $22.5 trillion truly is. As Jon Miltimore has written, “the problem is that the human mind has trouble understanding a figure so huge.” Below are some facts that help put into perspective just how large is the sum of $22.5 trillion:
- In order to pay down our national debt you would have to combine the GDPof China, Japan, and India.
- The United States owes $68,400 per citizen.
- The United States owes $183,000 per taxpayer.
- The United States currently has $125 trillion (yes, trillion) in unfunded liabilities.
- According to the nonpartisan Congressional Budget Office(CBO), the US debt held by the public will reach 100 percent of GDP in 2028.
- In 2008, interest on the federal debt was $253 billion. Interest for Fiscal Year (FY) 2019 is roughly 89 percent higher.
- For FY 2019, interest alone on the federal debt is $479 billion. In 1979, total federal government receiptswere $463 billion.
- In the year 2000, the federal debtwas $5.67 trillion. In 2019, federal debt is 297 percent higher.
- At Forbes, Jim Powell writes that the old New Deal cost about $50 billion from 1933 to 1940, whereas the “future cost of old New Deal programs still in effect is reckoned at more than $50 trillion.”
- A recent analysis by the CBO projected that the federal budget deficit (deficit as in the difference between federal outlays and revenues) will grow to $1 trillion alone in 2020.
- As of December 2018, only ten countrieshave worse Debt-to-GDP ratios than the United States.
- At NPR, Danielle Kurtzleben writes that Senator Bernie Sanders’ “taxation-and-spending plans…would together add $18 trillion to the national debt over a decade.”
- According to the Center on Budget and Policy Priorities, roughly 24 percent of federal spending goes to Social Security, 26 percent to federal health insurance programs, 9 percent to safety net programs, and only 2 percent on transportation infrastructure.
- By 2025, the cost of servicing our national debt will exceedthe cost of our military spending.
- The costof implementing a Universal Basic Income, presidential candidate Andrew Yang’s central social program proposal, would cost $3.8 trillion per year or roughly 85 percent of current federal spending.
- It would take the United States 713,470 years to pay down the national debt if we paid $1 per second of the year.
- Modern presidents have doubledthe national debt every nine years.
- The Federal Reserve“purchased large amounts of federal debt as part of its quantitative easing program,” thus cheapening the cost (decreasing the interest rates) of money.
Lawmakers and political pundits continue to insist that federal revenues are the real issue despite continuous growth in federal revenues. Heated rhetoric over federal tax cuts ignores the reality that federal spending increases continue to outpace federal revenue increases.
At some point, purchasers of US treasury securities may request a higher return, materializing in higher interest rates, unless lawmakers address our growing national debt. For now, it is up to voters to demand that lawmakers implement responsible policies that protect our nation’s financial security.
Mitchell Nemeth holds a Master in the Study of Law from the University of Georgia School of Law. His work has been featured at The Arch Conservative, Merion West, and The Red & Black. Mitchell founded the Young Americans for Liberty chapter at the University of Georgia.