There is a National Debt Clock, billboard sized, at One Bryant Park, west of Sixth Avenue between 42nd and 43rd streets in Manhattan, New York City.
Installed in 1989, it is the first such debt clock anywhere, initially paid for by real estate developer Seymour Durst, who wanted to highlight the rising U.S. national debt.
As Durst undoubtedly knew, Americans have long tolerated national government debt; in fact, the only president to fully pay off the U.S. debt was Andrew Jackson some 184 years ago (1835).
The National Debt Clock shows the bad news about U.S. federal borrowing, stimulated in part by tax cuts approved in late 2017.
The new national debt record of $22 trillion — the equivalent of the nation’s annual GDP — was reached recently under President Donald Trump despite the fact that he and many other elected officials, mostly Republicans, have long denounced debt and deficits.
One trillion dollars, by the way, is a thousand billions, which means it is a million millions. On a per capita basis, each American taxpayer needs to come up with $150,000 to pay it off, a most unlikely scenario.
An unsustainable path
The nonpartisan Congressional Budget Office (CBO) recently estimated that the deficit is expected to widen $900 billion further in 2019 despite a relatively healthy economy, especially when compared to the economies of other countries. By comparison, France’s debt, which also is about the same as its GDP, amounted to a little more than 2.3 trillion Euros (about $2.6 trillion).
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Specifically, the corporate tax cuts that President Trump advocated — and Congress passed two years ago — are the major cause of the increased debt. In fairness, Trump administration officials assert that the tax cuts, which are expected to widen the deficit by $1.5 trillion over the next 10 years, will pay for themselves by boosting economic growth and thereby increasing tax revenues.
For over five years, I have been involved with a Washington, D.C., group called “Fix the Debt.” The oversight group reflects a variety of socio-economic and political views, especially including Washington, D.C., insiders who are retired from public office, and also engages business and community leaders alongside American citizens like me.
One of the things I have observed is that there are few lawmakers in either major political party who are advancing solutions that would gradually pay down the debt.
The current surge, most agree, began when President Barack Obama dealt with the aftermath of the 2008 global financial crisis — inherited from President George W. Bush — by ramping up federal government spending, thus causing the federal fiscal ledger to begin to rapidly deteriorate.
It is not an overstatement to suggest that the current federal budget is on an unsustainable path and has been for some time.
Some facts surrounding the vexing economic crunch:
- The U.S. population is aging, with accompanying increases in health and pension expenditures.
- Three-quarters of the current total ($16.5 trillion) is in home mortgages.
- That household debt stands at $13.5 trillion, well above the previous peak before the 2008 crisis.
- The Federal Reserve Bank’s interest rate increases — nine in the past four years — have caused an increase in the debt service costs.
- A so-called “macroeconomic risk” is U.S. corporate borrowing that has almost doubled in the last 10 years, now standing at $9 trillion.
- Interest on the public debt cost U.S. taxpayers $13 billion more last December when compared to a year earlier.
- Student loans, which severely restrict the consumption of young people, last year hit a record of nearly $1.5 trillion.
- And auto loans, often by young buyers, set a record of just under $1.3 trillion in 2018.
All of us need to be better informed by becoming familiar with possible fiscal strategies that can place our unsustainable debt situation into the “can do” category.
While accomplishing a strong American economy in addressing the critical fiscal issues, the nation and its leaders must be reminded to protect those most at risk in our society and assure an effective safety net.
Any such a debt relief plan, however, will likely require reductions in the U.S. budget’s growth of spending, including entitlements, and consideration of increased taxes.
Citizens must demand a plan from presidential hopefuls
With the ramp up to 2020 federal elections upon us, citizens themselves must insist that candidates for federal office, especially including presidential hopefuls, know of the urgency of federal debt concerns, even if not in the short term, and demand a plan so that their children’s and grandchildren’s lives are not burdened with an impossible circumstance.
It is not that the U.S. federal government needs to be in the black all the time; public debt at 60 percent of GDP is an internationally recognized standard and is a sound target for stabilizing the debt; in the U.S., it is currently at 105 percent of GDP. To reach a sound target, our president and the U.S. Congress must reduce projected federal spending over the next decade.
Furthermore, additional efforts to curb long-term debt must be taken to, over time, reach the historical level of 40 percent of GDP in the United States.
When the facts are presented, our nation’s leaders must put aside partisanship and explore every short- and long-term option, including tax hikes, to build a plan that will result in a more balanced, growing economy and improve the economic well-being and security of the American people for generations to come.
Part of our homework may be in regularly checking the debt clock online as it ticks away in 2019.
Chuck Slocum is president of The Williston Group, a management consulting firm. He suggests visiting this website to do a “debt fixer” exercise.
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Nice trick, drive up the deficit with tax cuts, and then talk about the imperative of cuts to social programs.
We’ve see it before.
Simply unsustainable–what are we going to do without a space force, rebuilding of our nuclear might, and a missile defense system ? Unthinkable.
GOP, the party of “morning after” fiscal responsibility.
“stimulated in part by tax cuts approved in late 2017” that is a completely false statement. We are still taking in record levels of revenue. The tax cuts did not add to the deficit. It’s the spreading…always has been.
For the record, FY 2016 had an actual deficit of 1.4 Trillion. FY 2017 was about 700 billion. FY 2018 was about 1.2 trillion. The deficit actually went down after Obama left office. That data is all found on Treasury Direct website.
The only way to fix the problem is to fix healthcare. We must enforce 15 USC 1 which will drive the cost of care, and insurance, down to the historical norms of 3 to 4% of gdp. Any talk about single payer or universal care is simply fantasy. Neither would our spending problems. Bringing healthcare down to 4% of gdp would basically eliminate the deficit on its own. Make a few more cuts in Defense and welfare then you have a surplus with which to pay down the debt. No tax increases needed.
Your proposed silver bullet..15USC1
…..Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal…..
But from the Insurance Journal…
This idea has been put forward as an elixir to all sorts of health sector problems. In his joint address to Congress, President Donald Trump argued that allowing people to buy health insurance in other states would “create a truly competitive national marketplace that will bring costs way down and provide far better care. So important.”
The American Academy of Actuaries is less optimistic: “The ability to lower premiums by allowing cross-state sales of insurance is limited,” the organization says, “because a key driver of health insurance premiums is local costs of health care.” When the idea was floated last year at an industry conference, the “audience literally laughed,” one health care consultant noted….
https://www.insurancejournal.com/news/national/2017/03/07/443794.htm
Once again you are focusing on the wrong problem. Insurance isn’t the problem, the underlying costs of care are the problem. Insurance companies already lost twice before the SCOTUS on this issue.
15 USC 1 applied to doctors, hospitals, clinics, pharmacies, drug companies etc etc will lower the costs of care greatly. When that happens, insurance will come down as well. (And it can be applied to insurers as well since they collude with hospitals et al).
The problem is that medical care providers (and everyone else in that entire industry) collude and charge people different prices for the same things. They charge you based on your insurance plan. If you went to your favorite retail store and nothing had a price tag on it and the cashier charged you 50 times more than the person in front of you for the exact same item, would you stand for that? That is what happens in the healthcare system. It’s monopolies piled on top of monopolies. 15 USC 1 ends that just as it was used to break up Standard Oil.
You are waving a “magic wand” that you don’t understand.
Doctors/hospitals are going to compete across state borders? What does that even mean? You can go to New Orleans to see a doctor if you wish.
Seems to me you can buy a pacemaker or a drug anywhere in the US..
Where are the cross-border restrictions on that, except for your insurer.
Why are you going on about borders? 15 USC 1 has nothing to do with that unless people are violating anti trust laws or running a monopoly.
Yes, you can go anywhere to buy a service or product but they charge you based on your insurance … ie if you have Medicare, they charge you much less than if you have private insurance. That is against the law. Gas stations can’t charge you more or less for a gallon of gas than they charge everyone else. Retail stores can’t have multiple prices for 1 product based on who someone is.. the price is the same across the board. THAT is the problem with healthcare.
Well, no, it would not be true that “most agree” that the current debt surge “began when President Barack Obama dealt with the aftermath of the 2008 global financial crisis — inherited from President George W. Bush — by ramping up federal government spending, thus causing the federal fiscal ledger to begin to rapidly deteriorate.”
Because, in fact, President Obama inherited a trillion-plus deficit from Bush, and delivered a series of extremely modest spending increases to try and counter it. The stimulus package, which delivered less that $800B in economic boost was a pittance compared to the $6 trillion in economic activity that vanished during the Great Recession.
And once the worst had passed, Obama embraced austerity, agreeing to the sequester and even putting entitlement cuts on the table (only to see Republicans walk away from them). Obama cut yearly deficits two-thirds from their post-recession highs, only to see Republicans run up the credit card again during the first two years of the Trump Administration.
Obama signed about half of the FY 2009 spending bills so that deficit is also on him. He could have chosen to not increase spending but he did. His stimulus added billions to the deficit. Also, the recession wasn’t Bush’s fault. As much as I disliked him as President, he did warn about Fannie and Freddy. The recession was the result of yet another bubble which a few warned about ahead of time but Congress did nothing to prevent it.
Obama’s last full fiscal year deficit, 2016, was 1.4 trillion. He was by no means a fiscal hawk nor did he embrace austerity. He signed pretty much every spending bill that hit his desk. The data is ready available for anyone to look up.
No, the deficit in 2016 was not $1.4T. It was less than half that.
http://www.cbo.gov/publication/54918
You have to account for all debt. Pick Oct 1 2015 to sept 30, 2016 in the link below and subtract the 2 and see the difference. That is the actual deficit run by the federal govt. The CBO plays games by omitting debt.
https://www.treasurydirect.gov/NP/debt/current
The government under Bush was running about $400 billion in annual deficits. As soon as Obama came in, he changed it to over $1.4 trillion per year.
And Obama doubled the total debt in his 8 years unlike any other president.
Helps to not include spending on Middle Eastern adventuring…
Wow! You’d almost think Obama inherited the worst economy in 70 years!
This is easy: elect Democrats.
Bill Clinton left office with budget surplusess. Bush took us back to annual deficits. Obama reduced the deficits and Trump has driven them back up.
No need for the kind of nonsense Slocum is pushing. The current surge began with Obama? Congratulations on understanding nothing about how the economy and budgets work.
Clinton did it by cutting spending in many places. He slashed the military spend and started strict rules on entitlements. But too many people balked at it.
And Obama ‘reducing’ the deficits is a misnomer. He jacked it up from $400 billion to $1.4 trillion in his first full fiscal year, then got it to gradually go down to about $700 billion in his last year. He alone doubled the debt while having the economy stagnate.
The military budget in this country has never been slashed.
Thanks Chuck, as expected, First round of comments denial, denial denial, blame, blame, blame. Nothing ever in the context, what were/would the consequences be if. Still got folks crying about the Great Recession Bailout, but no surprise that bailout is still in place today, the Fed has what ~ $4T on their balance sheet yet? So we have a bailout still in place and then put another $1.5T on the credit card.
Tell you what, I agree with your article, the debt is real, and it is threatening, and is fueled by spending and excessive tax cuts. Everybody wants it all but don’t want to pay for it. What’s new?, As with most solutions, the answer has to come from both sides of the equation, more revenue less borrowing, less spending, and start paying down your credit card. Isn’t that the kitchen table solution, tighten your belt and take on another job.
We’ve been hitting record levels of revenue for many quarters now. Revenue isn’t a problem. Raising taxes again will actually reduce revenue (and slow the economy ) or at best keep it the same while spending continues out of control.
The only solution is to bring healthcare spending back down to 3-4% of GDP. That would eliminate the deficit almost on its own. The only way to do that is enforce 15 USC Chapter 1 across the board. End the monopolistic proactices in our economy and you’ll see costs drop. The people of this nation are being robbed of well over 1 trillion a year.
“Revenue isn’t a problem” WRONG, “Treasury said revenue from taxes collected from individuals for the period for October 2018 through January 2019 fell 2% to $19 billion. Revenue from corporations declined about 22% to $58.9 billion from $75.5 billion”
https://www.cnn.com/2019/03/05/politics/us-federal-deficit-balloons/index.html.
How about that military buildup you don’t want that either do you? Just because folks think it doesn’t make it real. Still looking for that pony!
“Specifically, the corporate tax cuts that President Trump advocated — and Congress passed two years ago — are the major cause of the increased debt”
I’ll be charitable and assume that the author hasn’t actually read the CBO’s report. This, from page 5 of the CBO’s forecast…
“Those large budget deficits would arise because outlays—particularly for Social Security, Medicare, and interest on the debt—would grow steadily under current law, and revenues would not keep pace with those outlays.”
Hey, we have the perfect President for knowing how to run up debt and walk away.
Gold toilets for all !
Eliminate the cap on salary subject to FICA, Let Medicare negotiate drug prices, and cut military spending in half (possible if we stop the eternal wars, end the development programs for weapons that even the military doesn’t want and bring our troops home). THEN, we can talk about creating a sustainable budget.
If we are going to cut spending, let’s start by tacking a good whack at the bloated military budget. Like 50%.
Because if you think the military budget is a defense budget, you haven’t been paying attention the last 100 years.
“To be fair” the Laffer curve Republican’s use to justify their tax cuts is a thoroughly discredited theory. Tax cuts do NOT pay for themselves for a variety of reasons. Mr. Slocum can’t pretend to be analyzing the problem while ignoring the obvious cause of the problem. These debts go all the way back to Reagan, as do the tax cuts that created them. If you’re not will to say that, don’t waste our time pretending to analyze the problem.
As for the debt’s and deficits… if we want to decide this is a problem we need to fix, the solution is obvious, and there’s only ONE solution. The only way to erase debts and deficits is to pay them down… you can deploy more “magic” all you want, but until you pay these things down they will remain and grow. Obviously this means raising taxes. We understood this when we came out of WWII with a huge debt… we paid it off with tax revenue. We can do that again if want to, but simply admiring the problem won’t fix it.
We HAVE candidates with plans to fix this problem. Deficit reduction and reductions in military spending combined with stimulus spending have been Sanders’s platform for decades. And he pays for it with tax revenue. So there… if this is your big priority… get behind the only candidate who has a plan that will actually work.
There has never been a tax cut that created a deficit. Deficits are 100% the result of spending. You cannot spend more than you make. If you go back through the years and look at tax increases, every time one was enacted, spending increased even beyond that (by a lot in some cases). We have always had a spending problem. After WWII we prioritized spending to pay down the debt and did not run deficits.
If you eliminated Defense spending entirely, we would still have 500+ billion in deficits. Soon we will add another 900+ billion annually to the deficit when Medicare runs out of special treasuries. Healthcare spending is our problem and the only way to fix it is to break up all the anti trust and monopolistic behavior in the system.
Bob, you cannot create a debt without spending more than you make, so yes, it is possible to spend more than you make. Debt is a real thing. Please don’t volunteer to help make any important financial decisions.
We’re not talking about spending outpacing tax revenue, we’re talking about deliberately reducing tax revenue without reducing spending… so yes- tax cuts cause the deficits, in even within your frame of logic.
By “you cannot spend more than you make” I was referring to not running up any debt. Govt should never run a deficit unless it’s an emergency like a major war. Thanks for proving my point that spending creates the debt (deficit).
Spending has always outpaced revenue (at least since Jackson paid off the national debt). Cutting taxes does not necessarily reduce revenue. In fact, most of the time revenue goes up as fewer people avoid the taxes and economic growth actually happens which brings in more revenue. Since the 2017 tax cuts, revenue has gone up. So there was no new debt created by those tax cuts. Spending always causes the deficits. Govt has a duty to cut spending but there isn’t a single Democrat in D.C. that would cut even a penny from the Federal Budget. Very few Republicans would either.
“By “you cannot spend more than you make” I was referring to not running up any debt. ”
Sorry Bob, but you’re still not digging yourself out of your logic hole. If we stopped all bonding of all kinds you’d have to raise taxes dramatically in order to pay for necessary services. We’re talking about necessary services here, not luxury items. Infrastructure isn’t a luxury item. You either pay for government with direct annual tax revenue, or you combine tax revenue with bond debt and pay that off with tax revenue.
Republicans have been claiming that we have a spending problem for decades, and every time they control of the budget… they make our spending problem worse?
Obviously, tax cuts without the offsetting spending cuts create a deficit. To argue otherwise is absurd.
But, let’s address the real contention…that we need to pay off the debt. We don’t. So long as deficits are less than the rate of growth in the economy, the debt will gradually decline as a percent of GDP, even as it continues to grow in nominal terms. We never need to pay it off, we just need to grow it slower than we grow the economy. If we run a budget deficit of say, two percent of the economy forever, while economic growth averages 2.5 percent per year, over a great many years, this problem solves itself.
There really is no good reason to ever pay it off. We would be foolish to try. That said, the deficits we currently run are unsustainable with our current rates of growth – the debt is growing as a percent of the economy, eventually it probably will cause problems. The Republican Tax Cuts were a catastrophe, and should be reversed. That would be a good start They generated almost no real investment, only stock buy-backs (transfers of wealth to the wealthy), which are pointless.
1 major reason to pay down the debt: Last year we spent ~ $415B in debt and rising, That is money we go not goods no services. To folks like me that is real money not being used in a beneficial and productive manner. The economy will not stay out of recession forever, As long as everthing goes perfect and according to a perfect plan is very wishful thinking not good economic thinking.