While it is often an overused and vague term, this year is showing that the “historic debt” not only has a definition, but it is becoming all too real for Americans heading into 2019.
Bloomberg reported: “Total public debt outstanding has jumped by $1.36 trillion, or 6.6 percent, since the start of 2018, and by $1.9 trillion since President Donald Trump took office, according to the latest Treasury Department figures. The latter figure is roughly the size of Brazil’s gross domestic product.”
{mosads}If this year’s debt growth rate is sustained through the end of the year, it would be the biggest jump in percentage terms since the last year of President Barack Obama’s first term.
While the numbers are significant, what’s discussed less is the context in which this debt increase is occurring: Modern history shows few examples of deficits this high outside of recession, war or the immediate aftermath of either.
As the Center for a Responsible Federal Budget noted, the current situation — where the deficit has jumped from 3.5 percent to 4.6 percent of GDP in one year — is “virtually unprecedented in current economic conditions.”
Deficits are not magic and do not arise by chance. As usual, their primary cause continues to be overspending. Just last week, Congress passed a farm bill with a staggering price tag of $867 billion over the next 10 years.
President Trump also recently announced his support for a $750 billion Pentagon budget, a full $100 billion above the congressionally mandated — and ignored — budget caps.
These latest examples follow a handful of ghastly spending packages earlier this year that flouted budget caps and all principles of fiscal sanity as they passed in quick succession.
While elected officials may lean on the strong economy as an excuse for why their spending habits are not so bad, the fact that they are allowing this spending spree under good economic conditions is all the more reckless. Put in alternative terms, the economy is doing well, and national leaders are doing all they can to wreck it.
What about those tax cuts? Well, while reduced revenue can also be a cause of a budget deficit, the recent strong economy produced record tax collections in October and November.
In fact, revenues were up in nominal terms in fiscal year 2018 compared to 2017, and only down slightly in real terms. Lost revenue can be a problem, but in this case, they’re not really part of the picture.
Ultimately, the causes of our deficit are increasingly structural — an aging population, rising medical costs and more beneficiaries than contributors to major programs means that deficits and debt will go up dramatically as spending on these programs continues to rise. That increase will occur unless major corrective action is taken.
Unfortunately, instead of moving now to avert potentially severe consequences in the not-too-distant future, national leadership seems content not to just to watch the red ink grow but to go on a gleeful spending spree and effectively hasten the problem along.
President Trump may have recently gotten heat for his blunt honesty, reportedly telling aides that he “won’t be there” when the eventual crisis hits, but is this viewpoint all that different from the myriad of supposed fiscal conservatives who have done nothing as Rome catches fire?
Speaker Paul Ryan’s (R-Wis.) regrets, after all, do nothing to remedy the potential catastrophe being handed to the next generation and, in more immediate terms, the next Congress.
At this point, the solutions to the problem have been covered at length and are enough to fill volumes of books no one will read. Politicians know what it takes, but they cannot bring themselves to take the action of cutting back because backlash for doing the right thing is too much to bear.
However, the reality remains that with a deficit the size of an entire country and both sides drunk on taxpayer money that now seems unlimited, voters would be wise to demand action now rather than waiting until the situation is truly out of control.
Jonathan Bydlak is a fiscal policy expert and the founder and president of the Coalition to Reduce Spending. He also spearheads SpendingTracker.org.