WASHINGTON—When Comptroller General Gene Dodaro of the Government Accountability Office (GAO) on March 12 makes public his agency’s latest assessment of the fiscal health of the federal government, one word will be especially prominent—“unsustainable.”
That’s according to GAO officials speaking with The Epoch Times on background, but it comes as no surprise, because for years, Dodaro and several of his predecessors in the congressional investigative agency have been telling Congress, the president, and anybody else who will listen that federal spending, deficits, and debt are on an unsustainable course.
The GAO message is simple: Officials can’t continue indefinitely spending more than the government receives in taxes without incurring staggering long-term costs to borrow from China and other lenders.
The specific numbers in the report Dodaro will make public March 12 will be updated, but otherwise, the document will be much like last year’s edition, which was titled “The Nation’s Fiscal Health: Action is needed to address the federal government’s fiscal health.”
Here’s what the 2019 report said:
“Over the long term, the imbalance between spending and revenue that is built into current law and policy is projected to lead to continued growth of the deficit and debt held by the public as a share of Gross Domestic Product (GDP). This situation—in which debt grows faster than GDP—means the current federal fiscal path is unsustainable.”
Susan Irving, a senior adviser to Dodaro, told The Epoch Times on March 2, “Our point is, we are trying to show the challenge we face. If you assume that you want to continue this—Social Security, Medicare, current policy—you can’t do it.”
Irving said that when “people ask us, ‘What do you mean when you say it’s unsustainable?’ we say, by definition, if debt is growing faster than the economy that it has to support it, it’s not sustainable.”
The basic numbers are grim and getting worse. The annual budget deficit is projected to reach $1 trillion this year and the national debt now exceeds $23 trillion ($122 trillion if unfunded obligations such as those of Social Security and Medicare are included).
That $23 trillion currently equals 109 percent of the 2019 GDP of $21.4 trillion. As the national debt goes up, so does the interest that must be paid each year on the funds borrowed by the U.S. Treasury to finance the annual deficit, the difference between annual revenues and spending.
The historical average of the debt to GDP is 46 percent, while the previous high-water mark for it was 106 percent in 1946 in the aftermath of World War II, according to GAO.
Rising interest costs associated with increasing national debt are projected by GAO to exceed total non-defense discretionary federal spending by 2024, go beyond defense spending the next year, and blow past Medicare in 2042 and Social Security in 2046.
Irving believes increasing interest costs are one factor in the government’s dire financial situation that resonates with the public.
“Let’s look at interest spending; you’re going to pay that, we’re going to pay the interest on our debt, and we’ve been pretty luck on that lately,” she said, referring to the historically low interest rates of recent years.
“But that is money that we don’t get to argue about. Interest grows, but imagine revenues come into the government, and you want to debate what they are used for. You want a battleship, and you want a housing program, and you want a tax cut,” she said.
“But the interest just goes up; you can’t argue about it, you just pay it. That’s money taken off the table, you’re going to pay it to preserve the full faith and credit of the United States.”
The interest rates government must pay to fund its annual deficits are set by lenders, not by the government, and the odds are the historic recent low rates will sooner or later go up, further hiking the government’s costs.
Dodaro’s upcoming report will also repeat something else GAO has been saying repeatedly in recent years—Congress, the president, and the public must make tough decisions about spending, taxes, and benefit levels, and the sooner they do so, the less pain will be felt by everybody involved.
“What you have to do is think about, over time, how are you going to bring revenues and spending back into line, so that you are paying less in interest,” Irving said.
The GAO adviser said her agency doesn’t tell Congress how to make such decisions, but it can highlight the difficulties involved.
“The closest I think we would come is, Gene [Dodaro] would say you have to look at both sides, by which he means spending and revenues [taxes], and we have to look at the spending we do through the tax code,” Irving said.
Tax code spending refers to deductions and tax credits on federal income taxes, the most popular of which are the mortgage interest deduction, exclusion of health care premium costs, and the deduction for state income taxes.
Contact Mark Tapscott at Mark.Tapscott@epochtimes.nyc