Eight months ago, we ushered in a new year and a new party in control of the White House, yet the ever-rising national debt seems to be eternal.
Nevertheless, we are periodically treated to the dog-and-pony show that Congress and the president put on whenever the nation is about to bump up against the debt ceiling, which is inevitably raised, but we can’t help but think that things might be even worse if politicians were not forced to at least pay lip service to fiscal restraint. We just wish voters would show more resolve in holding them to their promises of fiscal responsibility.
In the latest debt-ceiling circus, President Donald Trump struck a deal with Democrats this month to boost the debt ceiling in the short term, which should extend the nation’s credit until Dec. 15, and tied this to funding for hurricane relief. As a result, the national debt officially eclipsed $20 trillion for the first time, surpassing a dubious milestone. Even if you remove the $5.5 trillion in intragovernmental debt, which various parts of the government owe to one another, this translates to more than $125,000 per U.S. household.
And the government’s official debt statistic is likely significantly underreported. Adding in other debts like unfunded Social Security and Medicaid promises, Truth in Accounting pegs the total at more than $103 trillion — well north of $800,000 per household — and Boston University economist Laurence Kotlikoff estimates that the figure may exceed $200 trillion.
It would at least be somewhat understandable for the country to rack up massive debt if it was because we were in the midst of a severe economic depression or an existential military conflict, but the debt has continued to rise substantially despite the facts that we are in an extended economic recovery and the federal government is continuing to take in record levels of tax revenue. For the first 11 months of the fiscal year, which ended on Aug. 31, the federal government took in just shy of $3 trillion, yet it spent more than $3.6 trillion, resulting in a $674 billion deficit.
Moreover, our interest payments on the debt have been suppressed by the Federal Reserve forcing interest rates to artificially low rates, at near zero, which has decimated the savings of a generation. Interest rates on the debt are now about 2.3 percent, down from 8.8 percent in 1988
“The growth in debt is not sustainable,” Congressional Budget Office Director Keith Hall warned in 2015. “At some point, it’s going to get to a very high level. Obviously, you can’t predict tipping points, but at some point it becomes a problem.”
One thing seems clear: No matter which political party is in power, our elected leaders do not intend ever to pay off all our debt. This will continue to be the case until, or unless, enough voters demand that it become a top priority — and even that may not be enough.
It is difficult to even get one’s mind around a figure as large as $20 trillion, much less $200 trillion, causing most people, including politicians, to tune out and ignore it — but we do so at our peril. Just ask Greece, or Argentina, or Zimbabwe, or Russia, or Puerto Rico — the list goes on.
Orange County Register, Sept. 22