Today, the national debt is $31.4 trillion. It’s stuck there for the time being, as Congress considers increasing the national debt ceiling, with House Republicans led by House Speaker Kevin McCarthy (R-Calif.) demanding that spending be brought under control. And with good reason.
In 2010, Chairman of the Joint Chiefs of Staff Admiral Michael Mullen told CNN, “The most significant threat to our national security is our debt.” He followed with, “And the reason I say that is because the ability for our country to resource our military — and I have a pretty good feeling and understanding about what our national security requirements are — is going to be directly proportional — over time, not next year or the year after, but over time — to help our economy.
“That’s why it’s so important that the economy move in the right direction, because the strength and the support and the resources that our military uses are directly related to the health of our economy over time.”
In 2011, House Republicans insisted that a spending freeze accompany any raising of the debt limit. What resulted was something called “sequester” which succeeded in lowering U.S. government spending from a then record-high of $3.6 trillion in 2011 to $3.45 trillion in 2013. Our nation’s deficit dropped from $1.3 trillion in 2011 to $441 billion in 2015.
By 2019, the deficit had increased to $983 billion as spending jumped to $4.45 trillion – a full trillion dollars in the six years from its bottoming out earlier that decade.
Then COVID hit and the resulting government shutdown and other economically impacting interventions caused havoc. The government, on a bi-partisan basis, decided that the taxpayers should provide a stop-gap to the temporarily disastrous impacts of COVID to the overall economy and to individuals who found themselves unemployed or their businesses shuttered. And naturally, spending jumped by an additional $2 trillion dollars to a record high of $6.55 trillion.
In 2021, spending jumped again to $6.82 trillion, followed by a meager reduction to $6.27 trillion in 2022 even though COVID spending had largely run its course. The budget deficit in 2022 remained at near record levels of $1.38 trillion even though revenues received by the federal government reached $4.9 trillion (a massive jump of almost $1.5 trillion from three years earlier in 2019.)
There is simply no reason to retain COVID levels of spending in 2023. And it would be economic suicide to continue to pretend that deficits don’t matter.
Incredibly, if Congress as part of a debt ceiling deal simply reset spending in America to a 15 percent increase above the 2019 level, they would authorize $5.1 trillion. If 2023 revenues increase by just over 4 percent, you would balance the budget immediately.
Is this possible? Probably not because Democrats would be loath to cut their spending increases for non-defense purposes and many Republicans would not agree to rollback defense spending increases agreed to over the past three years.
But the purpose of this numbers exercise is to demonstrate a possible pathway to balance that doesn’t take forty years to achieve.
The more likely deal would be around $5.7 trillion in spending, knowing that $400 billion of the deficit consists of one-time student loan forgiveness spending and approximately another $100 billion was Ukraine spending. This deal would effectively cut the deficit in half in 2023. If coupled with an agreed to one percent a year across the board cut for three years in non-mandatory spending, our nation would be on a sustainable pathway to balance.
In an age where urging that the debt ceiling increase legislation be used to tackle the deficit is termed “economic terrorism” by the current occupant of the Oval office, there is a relatively painless way forward.
I recognize that spending is not as simple as described above as mandatory spending will skyrocket due to the 8.7 percent cost of living increase Congress voted Social Security recipients to offset inflation as well as increased numbers of retirees. When this is combined with the increased cost of servicing the national debt due to likely interest rate hikes on the approximately $8 trillion of US Treasuries that will need to be issued this year (some due to new debt, the rest due to rolling over existing debt,) the chickens of our profligate spending spree are coming home to roost.
There is a national emergency and it is our spiraling national debt. The debt ceiling law was put in place to force Congress and the President to deal with deficit spending periodically. We will have this discussion about the debt and what to do about it because of this law. Demanding steps to lower deficit spending and putting a pathway toward a balanced budget in place is what the spirit of the debt limit law demands.
And those demonizing members of Congress for standing up to the big spending special interests and fighting to save our country from fiscal ruin, should come clean and argue in favor of trillion dollar budget deficits as good national policy rather than playing the cowardly game of name calling.
Rick Manning is the President of Americans for Limited Government.
To view online: https://dailytorch.com/2023/01/congress-must-act-before-the-debt-bomb-goes-off/