America’s national debt has spiraled out of control in recent decades. TheUS Debt Clock reportsat the time of this writing that the current national debt is just under $29 trillion and rising by the second. A quick glance at the sea of red on this handy tool may leave one to wonder when our elected leaders will stop running massive deficits which will likely lead to painful financial consequences for the nation, if not in our lifetimes, then certainly our children’s.
It should be obvious that burying the country in debt is not a feasible long-term strategy, but recent analysis by the nonpartisan Congressional Budget Office (CBO) suggests that American politicians are likely to continue kicking the can down the road for at least another decade.
The Peter G. Peterson Foundations summarizes the report as the following:
“Annual deficits are projected to remain above $1 trillion for the next 10 years…The report — which takes into account the Administration’s economic forecast and assumes the President’s legislative agenda is enacted — showed somewhat lower deficits than were anticipated earlier this year, owing to higher projections for economic growth.“
The report anticipates that the national deficit will be the greatest in 2021, reaching approximately $3.1 trillion dollars and will then drop off and stabilize somewhere around $1.5 trillion per year subsequently.
This analysis considers multi-trillion-dollar spending packages being weighed by Congress currently as part of President Joe Biden’s Build Back Better initiative. The spending bills which would bring this vision into reality have hitspeed bumpsin recent weeks, however, and it is not clear if they have the support needed to pass in their current incarnations.
But no matter the fate of the President’s agenda this year, the systemic problem remains: America spends far more than it generates in taxes.
“…federal spending will climb from 21.6 percent of gross domestic product (GDP) in 2022 to 31.8 percent by 2051; that growth is largely due to spending on healthcare and retirement programs for elderly Americans along with rapidly growing interest costs. Revenues, on the other hand, are only projected to climb from 17.3 percent of GDP in 2022 to 18.5 percent in 2051.“
While the price of these programs is massive and will continue to grow, a more menacing expense looms large over the governments endless spending sprees.
In 2019, national security focused journal,The National Interest,put the growing interestowed on our national debt within the context of our military spending:
“By 2025, the mere interest payments on the national debt are set to eclipse defense spending. For a household, this would be the equivalent of incurring credit card bill’s every month that are the same size as their mortgage payments.“
Analysis by the CBO also reflects the mounting weight of interest on our government spending:
“Interest costs will soon be the fastest-growing “program” in the federal budget — exceeding the growth of Social Security or Medicare — and will total $5.4 trillion over the next decade…”
Ultimately, the nation appears to be on an unsustainable path financially. Accumulating debt at these projected rates will be the country’s debt at far greater than 100% of its Gross Domestic Product and nothing short of drastic overhauls in the tax code will make up for the trillions that government wants to spend on programs beyond those mandatory programs, such as Social Security, Medicare, and servicing the mountain of debt the government has already created.
History shows that the government will not be able to tax its way out of this problem, nor will throwing money at the economy through government programs simply make it all go away. The only solution to the crisis the government is creating is for the government to get serious about spending the taxpayers’ money responsibly.
Image Credit: Photo by Adam Nir on Unsplash
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