I don’t know when the debt ceiling will be raised, but it will be raised. Every time federal spending bumps up against the debt ceiling, we witness the same drama, a drama so predictable that you could almost call it a ritual: Republicans, citing a need for fiscal restraint, demand some cuts to federal spending; Democrats resist the proposed cuts; eventually, after playing “chicken” to see who will blink first before the U.S. Treasury suspends some payments, the two parties cut a deal, and Uncle Sam resumes the apparently unstoppable race toward ever-greater debt. It happens every time.
Let’s peek beyond the moment when the debt ceiling is raised. What can we anticipate going forward? The answer is easy: more debt. In March, President Joe Biden unveiled a 10-year budget plan that included $17 trillion of additional federal debt. $17 trillion! That is an increase of more than 50 percent in only 10 years.
Meanwhile, the legislation passed by House Republicans last month ostensibly would cut proposed future spending increases by $4.8 trillion. I will readily concede that the GOP’s $12.2 trillion of additional debt is less bad than Biden’s $17 trillion, but in no way can such numbers be regarded as fiscally conservative or fiscally responsible.
In fact, while the Republicans talk a better game to those of us old-fashioned enough to believe that no society can perpetually live beyond its means, when they're in power, their actions don’t always mirror their rhetoric. When the last two Republican presidents had a Republican-controlled congress with which to work, federal deficits increased.
The bottom line is that the national debt has been rising regardless of which political party has the upper hand in Washington. The problem isn’t confined to one particular party; it's systemic. The dominant political incentives lead toward more debt because “we, the people” demand more spending while resisting higher taxes. Our federal debt can be likened to driving toward a cliff. If Republicans prevail in the current showdown and limit the increase of new debt over the next decade to $12.2 trillion rather than Biden’s $17 trillion, we will still be charging toward that cliff, but we won’t get there quite as fast.
What do I mean by a “cliff”? At some point, we will go over the edge and face a major crack-up. That will happen when the growth of GDP can’t keep up with the rate of growth of the national debt and the annual carrying cost of that debt. Then, the fiscal burden of that debt will crowd out government spending, resulting in desperate measures such as the government frantically raising taxes (and crushing the private economy in the process) and/or the Federal Reserve decimating the purchasing power of the dollar via inflationary policies. Nobody can predict when that will happen. Don’t be surprised if it happens before the national debt rises to $43-plus trillion by 2033, as is projected under the more optimistic Republican scenario.
The only way to break out of our self-destructive downward debt spiral is to make radical cuts in federal spending. I don’t use the word “radical” lightly, but business as usual is incapable of containing the damage from the almost unfathomable $31.5 trillion of debt, with at least a trillion more to be added every year. Uncle Sam’s annual deficits can't be eliminated by trimming proposed spending increases. And paying down that debt to reduce the fiscal burden we're placing on our children’s backs requires even more drastic changes.
I know what you're thinking: Balancing the budget is a gigantic enough task as it is, but paying down the debt is crazy! Maybe so, but even to hold the debt steady at, say, $33 trillion after the debt ceiling is raised soon is to sentence generation after generation to pay for vast amounts of past government spending in perpetuity (or, more realistically, until the demise of Federal Reserve Notes).
Following are three changes on a scale large enough to begin breaking free from our national debt addiction. I fully realize that these proposals are non-starters politically. I’m just saying that reforms of unprecedented magnitude are necessary if we're to slay the debt monster.
Here are three jarring proposals that reflect the scope of the challenge we're facing from the national debt:
There are many candidates for elimination, including the Department of Education, which, judging by standardized test scores, is not helping to educate America’s youth, or the Department of Energy, which hasn’t yet, to my knowledge, produced any energy. I propose targeting a bureaucracy that has been around longer and is more deeply entrenched than most: the Department of Agriculture (USDA).
Three: Find a way to keep Social Security and Medicare from tapping into general revenues. Until the entitlement mess is straightened out (entitlements now comprise over 60 percent of the federal budget), the federal government will never be on a sound fiscal footing. How to accomplish such a transition is beyond my pay grade, but it needs to happen, or else federal entitlements will crush our economy.
To repeat, I freely admit that the ideas I have suggested are of the “pie in the sky” variety at this stage. All I'm trying to do is to convey a sense of the magnitude and difficulty of the challenge that lies before us.