There was a lamentable disco song in the 70’s that claimed “love is like oxygen.”
That may be true. If it is, then having too much debt is like carbon monoxide. Debt is colorless, odorless and deadly to anything if allowed to build up to dangerous levels.
At some point, usually when it is too late to do anything about it, excessive debt leads to a very uncomfortable reckoning — bankruptcy. In the case of nations, it leads to currency value collapse, hyper-inflation, exorbitant interest rates and dissolution of empires and national status, if history from the past 800 years is to be believed.
Profligate government spending and largesse has led to more nations collapsing and being replaced than all wars in history combined. Governments die with a whimper when bankruptcy happens. All of them could have survived had they stopped spending more money than they received in taxes from their population early enough to avoid economic disaster.
It sounds simple, doesn’t it? The problem is that elected politicians value their jobs so much they continue providing bread and circuses for voters but never make the tough decisions to curtail spending.
The only time politicians in Washington made such tough decisions in recent memory was in the 1990s. A coalition of thoughtful fiscally-responsible Republicans and Southern Democrats provided the leadership and majorities necessary to produce balanced budgets from 1998 to 2001. Congress holds 99% of the cards when it comes to balancing the budget. Presidents can propose budgets, but they can only sign or veto the final package passed by Congress, so assigning too much praise or blame on presidents is misguided and off-target.
President Trump released his FY 2021 budget last week, which purports to reduce national debt to 66% of GDP by 2031. CBO released their analysis, which says we are going to have $1 trillion annual budget deficits for the next decade regardless of who is in the White House after the 2020, 2024 and 2028 elections.
It is baked in the cake. We can’t run from massive budget deficits anymore. Congress has to put a brake on spending growth. Now.
CBO estimates the US will owe $31 trillion in debt held by the public at the end of 2030, up 72% from $18 trillion today. America has incurred massive debt before, usually to pay for a war effort, but never in relative peacetime.
What changed structural budget deficits forever was the passage of Medicare and Medicaid in 1965. No longer would people leave federal rolls as soldiers did after wartime. Millions of seniors would stay permanently on federal assistance on Medicare when they reached age 65.
Average life expectancy for someone born in America in 1900 was 48 years. Most did not survive long enough to qualify for Medicare or Social Security in 1965. Average life expectancy for people born in 1955 is 74 years. Life expectancy for babies born in 2020 is 79 years.
At a very minimum, the eligibility age for Medicare should be adjusted to correlate with the rising threshold for Social Security, now at 66 years and two months. Americans are living almost 50% longer than a century ago. Our entitlement programs should reflect that welcome and desired improvement.
We don’t have to pay off the entire $18 trillion in national debt owed to the public in one year. We have to stop adding $1 trillion to our debt per year which we also did in 6 of the past 11 years.
Holding overall growth in federal spending to 2% per year for a decade would be like opening the garage that has a car in it filling up with carbon monoxide. There is no sense in trying to see how much carbon monoxide a person can tolerate before expiring.
The same is true with burgeoning national debt. Why take the chance when we can do something about it today?