It's not fun to talk about fiscal responsibility, but it's becoming a mathematical necessity.
In 2008, the national debt was $10 trillion. It nearly doubled under President Barack Obama, despite the savings from budget sequestration, which severely strained military resources but saved precious revenue. (Military officials said it threatened national security due in part to the automatic nature of the cuts.) Under President Donald Trump, the debt has grown to $21.5 trillion and is now larger than the country's annual gross domestic product, a level not seen since the end of World War II.
It's not just that the United States owes its lenders trillions. It must pay interest on those loans. The Federal Reserve kept interest rates low during the Obama administration as the economy struggled. This artificially lowered the government's interest payments. Now, with low unemployment and tax cuts that cushioned the corporate bottom line, the Federal Reserve has been increasing interest rates to curtail inflation and ensure the economy doesn't overheat.
This has led to more than simply higher costs for borrowers. It also has raised rates for the federal government, the biggest debtor of all. As The Wall Street Journal reported earlier this month, in 2017, the federal government spent $263 billion on interest, accounting for 6.6 percent of all outlays.
That amount will balloon to $915 billion by 2028, equivalent to 13 percent of all federal spending. It's hard to comprehend numbers that large, so consider how this compares with other items.
By 2020, interest will cost the federal government more than Medicaid. In 2023, the federal government will spend more on interest than defense. In 2025, interest spending will outpace spending on all discretionary programs, excluding defense. Those estimates come from the Congressional Budget Office.
That's a best-case scenario. The CBO projections don't include the ramifications from an economic downturn in the next 10 years, which is a virtual certainty. Expenses such as food stamps and unemployment benefits would increase. Revenues, especially income taxes, would drop. That would explode the debt at a greater rate, as the government relies on even more deficit spending to make up the difference.
Democrats are quick to blame the tax cuts Republicans passed last year, but that's deliberately shortsighted. The doubling of the deficit under Obama resulted from spending increases. Profligate spending has continued under Trump; the budget deal he signed last March increased spending by $300 billion over the sequestration caps passed in 2011.
In addition, the biggest expenditures — the automatic growth of Social Security and Medicare — are the politically hardest to reform.
The politics are tricky, but the math isn't. Government spending is unsustainable — just like fiscal conservatives and libertarians have noted for decades.
REPRINTED FROM THE PANAMA CITY NEWS HERALD