With the elections over and a unified Republican White House and Congress about to take the reins of power, there’s an overriding issue that should be on every lawmaker’s radar. Unfortunately, while the recent campaigns were dominated by everything from military conflicts abroad to inflation at home, we heard very little about America’s worsening fiscal crisis.
I visited Charlotte recently to speak with civic leaders and the North Carolina Advisory Board on the National Debt on a topic that my nonpartisan organization, the Committee for a Responsible Federal Budget, believes should get far more attention: America’s perilous finances.
Our gross national debt (including the money the federal government owes itself) is $36 trillion and growing, with debt held by the public at $28 trillion. We borrow an additional $5 billion every day, and we sponged $1.8 trillion in the fiscal year that just ended.
The US is projected to borrow more than $22 trillion over the next decade, resulting in our national debt reaching a new record high — larger as a share of our gross domestic product than during World War II — by 2027, then climbing further. This will come with serious ramifications for families, businesses, and the overall economy.
In many ways, we are already feeling the impact of a series of congresses and presidents who refused to pay for their policies, heedlessly passing the costs to future generations in the form of a growing national debt.
Our reckless path
When interest rates were near zero, some suggested the debt didn’t matter and that we could borrow indefinitely without consequence. They were wrong. In just the last few years, our federal debt has helped drive interest rates and inflation to the highest levels in a generation, punishing would-be home buyers and small businesses in need of capital.
The results for our national government have been equally troubling. Federal interest payments now make up the second-largest piece of the budget, behind only Social Security. Servicing our debt cost us nearly $900 billion this past fiscal year — exceeding what we spent on our national defense or Medicare and far more than total spending on various federal programs for children.
Some of the policies that drove the debt were effective, or at least justifiable. For example, no one questioned the need to borrow to head off an economic recession or to fight a worldwide pandemic.
What we’ve lost sight of, however, is the principle that if something is worth doing and has enough support in Congress to become law, then we should pay for it by cutting other parts of the budget, by raising taxes, or both. Anything else is irresponsible.
American voters used to demand as much, and their elected representatives responded. Politicians in both major political parties won federal elections in the 1990s by presenting fiscally responsible spending plans and by enacting a series of compromise agreements that ultimately balanced the federal budget at the turn of the 21st century.
Unfortunately, that progress is long gone, replaced by structural budget deficits that will take more than a decade to correct.
A brighter future
But my reception in Charlotte gives me hope that, when sensible people are made aware of how bad our dependence on debt has become, they understand the implications of the deep hole we’ve dug ourselves into — and our dire need to stop digging.
This aligns with recent polling data from the Peter G. Peterson Foundation, which found that 52% of likely voters in North Carolina consider it “very important” that the presidential candidates address the issue — making it a higher priority than foreign policy or climate change. When the scale and consequences of the debt were made clear, that number rose to 69%.
The civic and political leaders I met with in Charlotte, many of whom long for the budgetary discipline of decades past, made clear that they want to see our political leaders step up to this crucial challenge and put our nation on stronger long-term economic footing.
This will require a pragmatic, everything-on-the-table approach that considers changes to the largest government programs, such as Social Security and Medicare; the likely need to raise new revenue; and cutting spending elsewhere to tighten our government’s bloated belt.
It also hinges on voters rewarding policymakers in both parties who are willing to face reality and take strong stands on these vital issues. It’s time for decisive action on behalf of us all. Then we’ll owe our politicians in Washington a different kind of debt — one of gratitude.