Yes, the Debt Really Is a Problem
Despite the feeling of “crying wolf,” conservatives correctly warn about the debt crisis.
America is approaching a major fiscal crisis, one that could fundamentally change our way of life, and not for the better. That crisis, of course, is the growing national debt. Clocking in at $20.2 trillion at the end of fiscal 2017, which ended Sept. 30, the debt boggles the mind and confounds the imagination. Economists, certain members of the business community, and reasonable elected officials (what few still remain) are deeply concerned about this. And the public should be, too. Yet, far too many people are remarkably unconcerned about the current state of affairs.
Admittedly, it’s hard to wrap one’s head around such a staggering figure. With “just” $1 trillion, you could buy every NFL, NBA, NHL and Major League Baseball team in the country. And $20 trillion is greater than the market capitalization of all the companies on the S&P 500. The richest single person in the world, currently Amazon founder and owner of the Washington Post Jeff Bezos, only holds $90 billion.
All this fun trivia aside, our national debt is frighteningly real. And few people in Washington, none of them Democrats, want to do anything about it.
The size of the number adds a level of disbelief, but another reason for inaction is the perception that economic doomsayers have been crying wolf. Ever since the debt crossed the trillion-dollar threshold during the Reagan presidency, we have been hearing constant warnings about the growing national debt and the harm that it will cause the economy. These warnings were real, but they went unheeded.
Aside from some cyclical recessions, the 80s and 90s proved to be good economic times for the country. Low unemployment, booming business and life-changing technological innovations muted conversations about the debt and the growth of the federal government. Budget surpluses in the late 90s all but kicked concern over the national debt to the curb. What few people realized at the time, however, was that even with those surpluses, the national debt continued to grow every year, thanks in part to the interest on the debt that continued to mount.
In fact, the national debt has not decreased year over year since fiscal 1957. At that time, the debt dropped from $272.7 billion to $272.5 billion. When Dwight Eisenhower was president, that $200 million cut was probably a big deal. Now, it’s too small to even be considered a rounding error.
A trillion-dollar national debt was not motivation enough for Washington to change its spending ways. Crossing the $5 trillion threshold in 1996 didn’t seem to rattle enough lawmakers to pass spending reform, either. In 2008, when the debt reached $10 trillion, Republican lawmakers sounded alarms and proposed serious spending and entitlement reforms. Democrats, however, balked at the idea and accused Republicans of class warfare.
Then along came Barack Obama. In his eight years in office, the national debt doubled in size. Neither he nor his Democrat cadres in Congress expressed any concern over the issue. And they jealously defended Medicaid, Medicare and Social Security from any reforms, ignoring the fact that these are the very entitlement programs that were driving America over a fiscal cliff.
The Left’s inverted view of the American economy is based on the idea that the federal government is the driver of the economy, not the private sector. Embracing this mindset allows them to push the idea that deficits do not suggest a spending problem, but a revenue problem.
This is why the current tax cut that we hope to see before Christmas is the bane of Democrats. They are trying to frame the tax cut as a loser because it will supposedly add $1.5 trillion to the deficit over the next 10 years. As if we are supposed to believe they really care about that after supporting Obama’s record-breaking annual budget deficits for eight straight years.
At what point, though, does the national debt become a critical problem? Decades of watching the debt grow have not yet led to fiscal disaster, even if we are seeing the early effects of massive debt.
The Heritage Foundation’s Romina Boccia refers to it as the “silent crisis.” Fewer jobs and slower economic growth are the first symptoms. If the present course holds, the coming years will bring high inflation, economic contraction, a shrinking ability to maintain current entitlements, and a complete inability to afford new ones.
The tax cuts will help prime the pump to get the economy moving, but spending cuts must follow if the national debt is to be brought under control. Targeted spending cuts to shrink the size of the federal government and sincere reform of Medicaid, Medicare and Social Security are the only way to prevent a financial calamity that could wreck this country.
Democrats don’t want to touch entitlements at all. But if something isn’t done to reverse the course of the growing debt, the day will come when those entitlements will go away all by themselves because the government won’t be able to pay for them anymore. And if action is not taken now, that day won’t be far off. Best estimates give us a decade or so before that happens. It’s better to do something now while there is still time and options. The longer Washington waits, the more painful the fix will be.
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