America’s national indebtedness can no longer be ignored. A binding force in Alexander Hamilton’s time, it is a millstone on our next generation today. Our national debt has become a bona fides moral issue. Older Americans know the truth: The national debt is unsustainable. It demands responsible leadership from Washington.
While endless zeros are mind-numbing, average Americans need to digest where our debt is – and how we got here. Collectively, we have eaten our seed corn; we have pulled our children’s prosperity into the present and spent it. This fact is horrifying – and true. It should also be motivational.
Walk down memory lane. When Ronald Reagan took office in 1981, national pundits bemoaned our “one trillion” dollar debt. They were right. Following Carter’s recession – marked by double digit inflation and unemployment – that was a big number.
America had 230 million people, so the national debt was roughly $4,348 dollars per citizen. By the time Reagan left office, having cut federal programs, regulations and agencies, created 18 million new jobs and spurred growth, the federal debt still stood at $2.6 trillion. Part of that was military spending to defeat the Soviet Union.
The debt rose in early Bush 41, but fell toward end of his term and continued under Clinton –until 2000. But here is a hard truth: A falling annual debt increase still leaves a higher cumulative debt. At end of Clinton, our debt was $5.7 trillion.
Why? Because the falling annual increase does not reduce overall debt; it continues to rise. Add annual interest, and you have ingredients for runaway debt. Add the 9-11 terrorist attacks, two extended wars in Afghanistan and Iraq, regulatory suffocation, and zero interest in entitlement reform and you get runaway debt. By the end of Bush 43, America faced a staggering cumulative debt of more than $11 trillion dollars.
Then came Obama. That White House was existential, living in the moment and for the moment, no attention to debt they were driving up. We funded “shovel-ready” infrastructure (that produced no infrastructure), Obamacare (which hit the national and personal wallet hard), massive bond purchases by the Federal Reserve and spikes in discretionary spending – again, with zero interest in reducing the drag of entitlements or debt.
Even before the cost of debt maintenance, entitlements devour two-thirds of every tax dollar collected. By the time Obama left, our nation faced a cumulative national debt of more than $20 trillion dollars. The Obama growth rate – over eight years – averaged less than 1.5 percent, worse than the prior 12 administrations.
This is what President Trump inherited. Where are we today? On one hand, we just had highest one-month growth rate in 30 years. For the past two years, we have seen robust turnabout in consumer confidence, economic growth, buoyant manufacturing sector, plunging unemployment (in all demographics), high labor productivity, recalibrated trade relations, and rising wages –as the Federal Reserve raises rates to normal range.
But what about that national debt? Answer: Today, it stands at $22 trillion. In a nation of 327 million Americans, that’s more than $67,278 dollars per citizen. So, every child born today in America – owes about $70,000 before they leave the hospital. Is that America?
Who has spent their money? We did. More specifically, Congress did. What is Congress doing about that terrible imposition on the next generation? To date, nothing. They just keep raising the debt ceiling, and talking about why we do not need a wall.
How serious is this? Very: We are now at a point where experts – including the non-partisan congressional budget office – project our national debt will wildly accelerate, interest escalating exponentially. In 5 years the interest on the national debt will be larger than the entire Department of Defense budget.
By 2030, ten years from next year, the national debt will exceed 100 percent of America’s gross domestic product. That is unsustainable. No incremental cuts, massive tax increases, or other federal tinkering – in 2030 – will support entitlements and debt repayment.
The only way to beat this debt beast – is to turn and confront it. That is what every American who cares about our future should be asking Congress to do. As post-World War I Germany and current Venezuela show, hyperinflation is what happens when a nation does not address debt. In a world of hurt and lawlessness, Venezuela has an inflation rate of one million percent. The value of currency is less than a cup of water, and the price of a cup of coffee doubles every week, life savings gone overnight.
Is that what we want? What is the answer? A combination of responsible entitlement reform, federal downsizing, reevaluation of our federal tax code, incentives for debt-reducing growth, a sustained effort to rebalance international trade – and less discretionary federal spending. There is no other way. That is the truth.
Older Americans have some things in common. Most have lived through bad times. They love America, and their families. They know when they see oral leadership – and when they do not. If America’s future is to be strong, stable and prosperous, Congress must get serious about debt. Debt reduction now has moral urgency. Congress must summon the courage to act on it – so our grandchildren can live free of debt, the way we once did. Because speaking of debt – we owe them that peace of mind.