Perhaps the most disturbing thing about the recent government shutdown was not whether Congress would agree to the construction of a border wall. It was that neither side made any attempt to stand for austerity.
Not long ago, shutdowns were staged over debt ceilings, sequestrations and fiscal cliffs — all in efforts to force cuts that might bring the nation’s expenses more in line with its revenues.
This one was staged over whether to add an expenditure. The Republican Party, long the vanguard of fiscal conservatism, was silent on the need for prudence.
Meanwhile, economists are noting an historical anomaly. The nation has both a booming economy and a growing annual budget deficit. Usually, deficits fall along with unemployment.
In fiscal year 2019, the federal government is projected to run a deficit of nearly $1 trillion, spending $4.4 trillion while raising only $3.42 trillion.
And, more ominously, the national debt — the accumulation of years of deficits — has just passed $22 trillion and is growing rapidly.
No one knows where the tipping point lies, but only a fool would say there isn’t a point at which reckless spending will lead to inflation, unemployment or, at the very least, an inability for the government to provide any sort of stimulus to ease the pain of an economic downturn.
This spending spree comes at an inopportune time. The nation is growing older. That will lead to greater pressures on programs such as Medicare. It also will place a bigger burden on a smaller core of young workers whose earnings must be taxed to provide Social Security to a growing class of seniors.
These pressures would exist regardless of federal overspending. But growing deficits make it harder to adjust for these obligations.
Over the past 50 years, annual deficits (the nation ran surpluses only a few years) averaged 2.9 percent of the gross domestic product. Now they are projected to average 4.4 percent of GDP over the next 10 years, or an average of $1.2 trillion per year, according to the Congressional Budget Office.
These figures cover only what the government owes to outside bond holders. Intragovernmental loans — money the government owes to itself — total another $5.5 trillion.
We believe in holding politicians accountable for their promises. As a candidate, President Donald Trump promised to reduce the nation’s debt. He accused President Barack Obama of having nearly bankrupted the country by allowing the national debt to rise significantly under his watch.
It’s true the Obama administration did little to stem the flow of deficits, although they fell gradually as the economy recovered from the great recession. But we’re still waiting for the Trump administration to make deficit reduction a priority, beyond vague assurances that tariffs would bring in more revenue.
Nine years ago, Wyoming Sen. Alan Simpson and former Clinton administration chief of staff Erskine Bowles chaired a supercommittee charged with finding a solution to the mounting debt. Their conclusion, a practical mix of tax hikes and budget cuts, remains the only credible option on the table. Neither side has yet to take it seriously.28 comments on this story
Other nations have gone down this road to eventual ruin. The United States is different because of its unique position in the world, and because the dollar is the world’s reserve currency. But this also means it has much more to lose.
Economic ruin would mean an inability to pay for the type of military capable of defending freedom worldwide. It would mean an inability to provide infrastructure or to continue programs upon which many rely. Ultimately, it would lead to inflation and unemployment. People would earn less and prices would rise.
Despite the current good times, Americans should demand their politicians work now to make sure that day doesn’t come.