WASHINGTON—Republican senators David Perdue of Georgia and Rand Paul of Kentucky admonished Congress Wednesday to confront America’s exploding national debt and budget deficits now to avoid the national disaster that will follow if they don’t.
“The national debt topped $22 trillion this year. We’re heading for an absolute catastrophe if we don’t address the real causes of future increases to our national debt, which are Social Security, Medicare, and interest on the debt itself,” Perdue said Wednesday.
Perdue, a former Fortune 500 CEO, cited the Congressional Budget Office (CBO) 2019 Long-Term Budget Outlook released Wednesday.
The CBO said “large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels—from 78 percent of gross domestic product (GDP) in 2019 to 144 percent by 2049.”
The only previous time in U.S. history that the national debt exceeded 75 percent of GDP was 1944 to 1950 as a result of the massive military expenditures during World War II.
The national debt began its steeply upward growth in 2008 when it consumed 35 percent of GDP, CBO said. Both the Great Recession of 2008-2009 and “and subsequent policies caused debt to grow sizably in relation to the economy over the next five years. By the end of 2012, debt as a share of GDP had doubled, reaching 70 percent.”
The upward trajectory has continued under President Donald Trump since he took office in 2017 with Republican majorities in both chambers of Congress.
The CBO report also warned that its projections show:
- The Social Security and Medicare trust funds will run out of funds within 20 years if nothing is done to change the entitlement programs’ revenue sources.
- Absent major policy changes now, interest payments on the national debt will increase so much in two decades that sufficient funding will be threatened for national defense, veterans care, and other national priorities.
- If Congress and the president do not enact spending cuts in 2020 or raise individual income taxes in 2026 when certain features of the 2017 tax reform expire, the public share of the national debt could reach 219 percent by 2049.
- If Social Security benefits were limited to amounts payable strictly from the program’s trust fund, debt in 2049 would still reach 106 percent of GDP, still significantly higher than the current level.
Both Perdue and CBO warned that failure to get control of the debt will sooner or later make it impossible to avoid spiraling interest rates, sharply increased taxes and huge benefit cuts in entitlements, especially Social Security, Medicare, and Medicaid.
The nation’s ability to respond in a timely manner in the event of military crisis at home or abroad could also be severely compromised, especially if the government had to default on its debt.
Foreign investors, including China, hold 40 percent of the U.S. debt, according to the Peter G. Peterson Foundation. The foundation also estimates that it would take 11 years to pay off the national debt if every U.S. household paid $1,000 each month.
The foundation also calculated that the national debt represents $126,000 per U.S. household and $49,000 for every individual American.
On the same day Perdue spoke, Paul introduced an amendment to pay for the $4.5 billion border crisis emergency funding bill by re-directing funds from obscure foreign aid programs that he and other critics believe are wasteful and unneeded.
“While there is a humanitarian crisis at the border, we also have in our country a debt crisis,” Paul told colleagues in a Senate floor speech.
“We should not borrow the money, pull out the credit card yet again, every time a crisis occurs. Congress has an obligation to find lower priorities to cut to pay for higher priorities. I thought that’s what legislating was about.”
Paul said he was “proposing to actually pay for this by taking the money from a part of the budget that it’s being wasted and put it into the humanitarian crisis at the border.”
One of the foreign aid programs Paul sought to defund was highlighted recently by Citizens Against Government Waste in its annual Congressional Pigbook. The other program cited by Paul uses U.S. tax dollars to fund overseas projects like “a clown show and a traveling circus.”
The Senate approved the $4.5 billion in emergency funding after rejecting Paul’s amendment on a 77-15 vote. Seven Democratic senators who are seeking their party’s 2020 presidential nomination were not present and did not vote.
The seven included senators Michael Bennett of Colorado, Cory Booker of New Jersey, Kirsten Gillibrand of New York, Kamala Harris of California, Amy Kloubachar of Minnesota, Bernie Sanders of Vermont, Elizabeth Warren of Massachusetts,
Sen. Mike Rounds (R-S.D.) also missed the vote.