In October 2008, the US’s national debt surpassed $10 trillion.
Mid-September 2017, the nation’s debt had risen to $20 trillion. It was so recent that it almost feels like last week. Do you recall Donald Trump’s threats of nuclear war on North Korea emanating from a New Jersey club country club? Have you seen? Thor: Ragnarok Are you in theaters This was in fall 2017. This was fall 2017.
Yesterday’s data release by U.S. Treasury proved that the country’s national debt had reached a new milestone, reaching $30 trillion.
Amazing is the pace at which the federal government has built the third mountain out of 10 trillion IOU notes. Yes, the response to the COVID-19 pandemic drove government borrowing and spending to stratospheric heights—but even before COVID appeared on the horizon, the operative question about the national debt was WhenNot IfThe country’s debt would reach $30 trillion. The drivers of the debt are an unbalanced entitlement system and a persistent gap between government spending and tax revenue—the result of more than two decades of poor decision making in Washington, where politicians from both parties have carelessly borrowed to pay for everything from foreign wars to $1,200 checks for most Americans (even those earning six-figures) during the pandemic.
Even though the debt isn’t going to cause default, or any other crises, it will affect Americans’ futures. Higher levels of debt are correlated with lower levels of future economic growth in no small part because the amount of money that must be siphoned out of the economy to pay the interest on the debt will keep getting larger. The debt service costs every dollar. This means that each dollar can’t go to new technology or pay employees.
It is also more difficult for policymakers to counter inflation because of higher debt levels. Inflation is rapidly eroding Americans’ savings and paychecks faster than ever before.
Maya MacGuineas of the Committee for a Responsible Federal Budget tells us that $30 trillion is “a jaw-dropping amount that is a serious cause for concern.” This nonpartisan group advocates for balancing our budget. The Wall Street Journal. It’s a combination of the need to borrow for very important crises such as the Covid pandemic but also the necessity of trillions and trillions in borrowing because politicians no longer want to pay the bills.
But aside from MacGuineas and her small band of allies, there’s little recognition in Washington that the debt is a problem. That’s Other problem. The 2008 election saw the national debt surpass $10 trillion. This was a big talking point. “That’s $30,000 per man, woman, child,” President Barack Obama declared at a Nebraska campaign event that year. “That’s irresponsible. That’s unpatriotic.”
After federal spending had exploded in the Great Recession of 2008, the Tea Party Movement sprung up to demand fiscal accountability from Obama and Congress. The results were mixed—sequestration and temporary budget caps slowed runaway spending even if they didn’t reverse it—until the Republican-controlled Congress under President Donald Trump abandoned the effort and jacked up spending.
According to the CRFB America borrowed $7 billion on average per day over the last year. However, the current form of supposedly conservative populism, rather than concern about America’s financial foundations, is driven by culture conflict.
While neither side is committed to reining in debt, they both contributed to a spending spree during the pandemic that was entirely funded with our credit cards. While some of the $5.3 trillion in emergency pandemic spending was a justifiable response to a once-in-a-generation crisis, much of it was wasted. States have huge budget surpluses and received billions of dollars in aid. People earning six-figures working remotely received direct checks, which were meant to provide financial assistance to employees whose jobs were closed by COVID. The economic output of every dollar spent on the $1.9 trillion relief bill last year is only $0.73.
When the pandemic is over, the debt won’t slow down. Social Security and Medicare will be more costly with the aging population. The deficits are expected to rise by $1 trillion per year, even if there is no unexpected crisis. This means that the amount of debt as a percentage and in real terms will not stop growing. According to the Congressional Budget Office, the federal government is expected to add $12.2 trillion more debt in 2031.
It won’t take long for us to look back on this week, and say that it feels like yesterday that the debt reached $30 trillion.