I recently ran across a news clipping from 2012 that I was featured in and was met with a wave of nostalgia. The news article covered an event I participated in as a 19-year-old college freshman at Montana State University to call attention to the growing national debt, which at the time had just surpassed $16 trillion. My student club was serving slices of cake, with each slice decorated with “$140,454” written in frosting representing each taxpayer’s share of the debt.
The last decade sure has flown by. Now as a 30-year-old, I read that the national debt has officially exceeded $33 trillion, more than doubling since 2012. Each taxpayer’s share of the national debt is now over $250,000. How’s that for inflation!
Yet, the politicians in DC seem content to keep kicking the can down the road for us future generations to sort out. In their latest squabble, this year we saw Congress nearly shut down the federal government while arguing over tactics for achieving modest reductions in discretionary spending, which is a mere fraction of the overall budget.
To be clear, discretionary spending only represents around a quarter of the federal government’s total annual budget. Mandatory spending like Social Security, Medicare, Medicaid, ACA subsidies, and pensions takes up two thirds of the budget. Just paying the interest on the national debt now is taking up nearly 10% of the budget.
It’s obvious Washington D.C. is not serious about reducing our national debt and deficit. They should be. If you aren’t convinced that controlling the national debt and deficit should be D.C.’s #1 priority, consider what we’re facing:
Even more inflation. The federal reserve’s efforts to tame inflation with higher interest rates makes federal borrowing much more expensive. Soon the cost of servicing the national debt will completely overwhelm the government’s budget. When this happens, the federal government will be forced to choose between debt default, severe austerity, or the more politically expedient option: inflating the debt away with more money printing. This will raise the cost of everything from gas to groceries and could spiral into hyperinflation and total currency collapse like we’ve seen before in places like Zimbabwe, Argentina and even Ancient Rome.
Higher interest rates. The American Enterprise Institute finds that quickly rising federal debt also puts serious upward pressure on interest rates as investors demand even higher Treasury yields. So, in addition to more inflation, an increasingly out-of-control national debt could mean borrowing money for homes, cars or credit cards becomes more expensive. That’s what happened in Zimbabwe, which currently has interest rates near 60% as they battle hyperinflation.
Safety net collapse. The Congressional Budget Office estimates Social Security is headed for insolvency by 2033. Without sweeping reforms to strengthen the program, benefits will be automatically cut by 23% for all beneficiaries when the program goes insolvent. Medicare is in a similar situation. As national debt payments consume a larger share of the federal budget, there will be scarce resources to dedicate to fixing these safety net programs that millions rely on, or even continuing to fund them at all.
Such high stakes should demand serious attention from our lawmakers in Congress, but it doesn’t seem to. Santa should give Congress a lump of coal this year for their lack of action on the national debt and deficit.
This column originally appeared in Lee Newspapers.