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).
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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