While the attention of the nation has been focused on the 35-day partial government shutdown and the issue of border security, little attention has been paid to the looming fiscal crisis facing the federal government and the American people. The national debt is now over $21 trillion and current estimates suggest that we will soon be approaching annual deficits in excess of $1 trillion. Our debt and deficits are the elephant in the room which few policy-makers wish to address.
Now, a trillion dollars is not something we can easily get our minds around. Lets put it this way: a billion dollars is a thousand million. And, a trillion dollars is a thousand billion. Any way you count it, those are very big numbers. The real question is this: at what point does our borrowing create a real economic crisis that will adversely affect all of us?
That $21 trillion national debt requires a sizable interest payment each year. Next year, federal interest costs are an estimated $897 billion, more than we spend on national defense. And with historically low interest rates now rising, interest payments will soon be over $1 trillion.
Many on the left contend the deficits are a result of the 2017 tax cut on businesses and individuals. In fact, the $1.5 trillion value of that tax cut over 10 years is significant but less than half of the $3.2 trillion in added deficits over the same period due to the rise in Social Security and Medicare spending.
Mandatory spending, Medicare, Medicaid and Social Security along with annual interest costs comprise approximately 72 percent of all federal spending. Everything else – national defense, water, sewer and road infrastructure, federally sponsored research on health, foreign aid, environmental programs, federal salaries and every other expense of government comprises just 28 percent of all federal spending.
And guess which portion of the federal budget is growing faster? If you guessed the mandatory spending side, you are correct. Spending on the mandatory side is growing faster largely due to demographic trends in our society. As we live longer – and the 20th century saw the largest increase of life expectancy in recorded human history – societal costs for Medicare, Medicaid and Social Security naturally rise.
Solving this looming crisis is difficult and politically perilous so it isn’t a surprise that most Democrats and Republicans choose to argue over other issues. President Trump has specifically avoided any mention of reform of mandatory spending programs to slow their growth and Democrats are actually proposing plans to expand spending in these areas without ever saying where the money will come from.
The elephant – and the donkey - in the room which we collectively ignore, is the looming fiscal crisis of our debt and deficits while spending too much time arguing over how we should spend $5 billion for border security or some inconsequential kerfluffle captured on YouTube at the Lincoln Memorial.
Deficit spending is a form of generational theft; we are explicitly passing along the bills for our spending today to our kids and grandchildren and those yet to be born. A fiscal crisis impacting multiple aspects of our economy may be the only thing which forces public attention on this issue. Better for responsible elected officials to start speaking frankly to the American people now, so they better grasp the issue and begin to create a national consenus on how we fix this problem.
Former Representative John Faso of Kinderhook represented New York's 19th House district in the 115th Congress.
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