An average taxpayer is going to have to fork over more than $2,000 this year just to cover their share of the interest on the national debt. It’s a huge sum going purely to finance the spending and borrowing of the past.
At the rate the national debt is rising, interest payments — the fastest growing part of the federal budget — will be bigger than Medicaid by next year and the military by 2025.
Although public concern for the debt rises and falls depending on the politics of the moment, the debt itself only rises. It is on an unsustainable path projected to grow faster than the economy — forever.
The challenge with dealing with the debt is two-fold: Most families can’t see how the issue affects them and therefore don’t think about it much; and second, politicians from both parties in search of ways to keep ducking hard choices latch on to excuses for why we shouldn’t worry about it.
But the debt threat is considerable. Not only will those interest payments continue to push out other parts of the budget that are essential to the preservation of our social safety net programs, the high debt also slows the economy and our standard of living, and it leaves us dangerously unprepared for an emergency like a recession, disaster or national security event.
It also means that we’re failing to build the kind of federal government we need to help us navigate a new world of growing competition, changing technology and the need for new investments.
Meanwhile, growing partisan politics leaves our leaders more focused on peddling false free-lunch solutions than actually leading:
- “Tax cuts pay for themselves” (they don’t);
- “my priority is too important to worry about paying for it;”
- “don’t worry we can just print more money;”
- “the debt isn’t really important and we can deal with it down the road.”
The list of bogus claims grows longer and longer.
It is very tough to say when the nation could hit a fiscal tipping point, but we can accurately pinpoint some looming milestones.
The highest our debt has ever been was just after World War II at 106 percent of the size of the economy (GDP). It quickly fell in the years that followed as war costs subsided, the economy boomed, and the budget was near balance.
Today, the debt is 78 percent of GDP, almost double what it was just before the Great Recession. It will pass the World War II-high in as soon as 10 years. Everything after that is unchartered waters.
During the next 15 years, four of our nation’s major trust funds will run out of money, threatening our ability to pay for highway programs, Medicare or Social Security. They all need to be reformed and fully funded.
These are the largest drivers of debt, and they need solutions phased-in over time. Congress seems intent on waiting until the 11th hour.
If you look 50 years out, the numbers are incomprehensible. Debt would be over twice as large as the economy even if Congress didn’t do anything to make it worse, and three times as large if they extend current policies.
We have a multi-trillion dollar problem that isn’t just being ignored, it is being recklessly compounded.
The last Congress and the president chose to double down on debt and put tax cuts and massive spending increases on the credit card — a tab that together will add another $2.4 trillion to the debt over the next decade.
The first step in addressing the debt is acknowledging it. The second is to stop adding to it. Only then can we come up with a plan to put it on a downward path back to responsible levels in a way that has the least impact on people’s lives.
No newly elected politician wants to spend time and capital cleaning up the past, but that is the position we find ourselves in. We need grownups in Washington to stop the demagoguery and come together to solve our biggest problems in a bipartisan way.
History is littered with stories of strong nations that borrowed to their peril; the U.S. needs to chart a different path.
Maya MacGuineas is the president of the Committee for a Responsible Federal Budget. Follow her on Twitter: @MayaMacGuineas. Ed Rendell is the former Democratic governor of Pennsylvania. Follow him on Twitter: @GovEdRendell.