John O. Sullivan
A few months ago, the Lieutenant Governor of Maryland Boyd Rutherford, a man not nearly as interesting as his name, began a video series entitled “Mundane but Meaningful,” where he tackles issues which are important, but, well, boring. This is a perfect topic for a man so dull as to be overwhelmingly soporific, and so powerless as to be nearly inert. But, I have to admit, the videos are good. Even funny. And they cover important topics, ranging from gerrymandering to procurement reform. So it is in that same spirit that I embrace a boring but important topic, and for our opening edition, I present for your entertainment and education: The National Debt!
The national debt is becoming a problem of unprecedented proportions. Currently, the federal budget deficit, the amount of money spent more than the amount raised in taxes, is about $700 Billion, every year this amount of money is added to the national debt. The national debt of the United States is now in excess of $21 TRILLION dollars, and growing annually by almost a Trillion dollars. To put this in perspective, it totals to about $64k per person, and it is more money than was produced by ALL economic activity in the US last year, from Apple, Inc. to zipper manufacturing. And while the national debt seems abstract, it has tangible effects here at home.
In 2017, debt service, the interest payments the federal government makes on the national debt, was 1.4% of the budget, or $263 Billion. The reason this number is so comparatively low is that the federal government is doing their version of making the minimum payment on our collective credit card, only doing enough to keep the lights on, continually pushing the problem down the road to handle another day. $263 Billion is more than the federal government spends on transportation, veteran’s benefits, and all social programs COMBINED. Imagine the good that could be done with another $263 Billion to spend on infrastructure, social programs, and veteran’s benefits. Or, if you’re of a more conservative persuasion, imagine the benefits of a $263 Billion dollar tax cut.
The national debt is also a major weakness in our foreign affairs strategy. It is true that the U.S. public and the federal government (through the Social Security trust fund) holds most of the federal debt, foreign parties hold nearly half of our massive debt. And while I think that the people who say the debt is a national security threat are being a bit hysterical, it is definitely a weakness. How can we try to get real with China when they know they have us on a massive golden chain? How significant can any economic sanctions be against any government that holds our debt? Carrying so much debt, which is increasingly held by foreign parties, significantly diminishes our ability to project change on the international sphere.
Finally, the national debt is a large and growing problem. As I said earlier, our 2017 debt service payments totaled to $263 Billion, which is a HUGE amount of money. It accounts for 40% of our deficit. And every year that we have a deficit, the national debt grows. Every year the debt grows, our debt service payments must rise, which only increases the deficit, which causes the debt to grow even faster, and on and on and on…. At current rates, debt service payments will nearly triple over the next decade, to over $700 Billion, exceeding even our massive defense budget, forcing the deficit to skyrocket and the debt to balloon out of control. This will eventually force out almost all discretionary spending, crowding out the entire budget until we are left with just social security and debt service. And while this might sound like a dream scenario to some people, the federal government would continue to have to collect taxes in order to pay that debt, so you’ll just be paying the same taxes with nothing to show for it. It’s a hard sell.
Unfortunately, this is a big problem with no easy solutions. Any solution has to include both spending cuts and tax increases, which are both implausible under current political circumstances. Neither party wants to cut any spending, despite what they say in the media. Both parties have programs they want to protect and constituencies to defend. And neither party wants to raise taxes, because no one votes for the guy who raised your taxes. And any realistic solution to the national debt requires both, raising taxes and cutting spending. We have to first eliminate a $700 Billion deficit, and then run surpluses for years, possibly decades, while we slowly but surely pay off the national debt. This is a problem that is easy to ignore because of how hard it is to see, but the longer we ignore it, the worse it becomes.