There is a bill collector at America’s door. Forty-five of the past 49 years, the U.S. Congress has spent more than the U.S. Treasury collected in revenue. Our national debt is now $22 trillion. To put that in perspective, if you were to spend a million dollars a day — every day — you would need 2,739 years to spend one trillion dollars. Prepare for a test. First question: What did we get for $22 trillion of borrowed money? Second question: How will we repay that debt? Third question: How do we stop the growth of the national debt?
In the current fiscal year, the U.S. government will spend $779 billion dollars more than it acquires in tax receipts. The next fiscal year, the government will spend a trillion dollars more than it receives in revenue. How long can that continue? What has the U.S. Congress done about the problem? They lowered federal income tax rates for the wealthiest citizens!
The George W. Bush administration did not ask Congress to provide tax revenue to pay for the invasion of Iraq. Instead, we borrowed funds and increased the national debt. The January-February 2019 edition of Smithsonian magazine reports that U.S. Armed Forces are engaged in combat operations in 14 countries: Afghanistan, Cameroon, Central African Republic, Iraq, Kenya, Libya, Mali, Mauritania, Niger, Saudi Arabia, Somalia, Syria, Tunisia, Yemen and also air/drone strikes in Pakistan. There has been no Congressional declaration of war, no tax bill to pay for these operations and, consequently, the national debt is increasing.
One argument offered by defenders of the national debt is that part of it is just money that we owe to ourselves, and it is therefore irrelevant. It works like this. Social Security tax is deducted from our pay, and employers pay an equal amount for each employee. During most of the time that Social Security has existed, more money has been collected than required to operate the Social Security system. The extra funds are deposited with the U.S. Treasury. The Treasury loans the money to other agencies of government. Various government agencies owe the Social Security system about $2.5 trillion. Because the size of the senior segment of the U.S. population in increasing, the Social Security system will soon need to reclaim those loaned funds. How will the other government agencies repay their debt to Social Security? The government will have to repay that loaned money previously raised by Social Security tax with new taxes.
Some theorists are advocating “modern monetary theory” (MMT). The claim is that government borrowing is unnecessary. The idea is that government should just credit its accounts with whatever amount of funds are desired or needed and everything will turn up roses. But, historically, just printing money has not turned out well. The economies of several countries were devastated during World War II. Production of goods and services was at low ebb, so they tried printing money to stimulate economic activity. That caused inflation. The money decreased in value. In China, prices doubled every five days. In Greece prices doubled every four days, and in Germany prices doubled every three days. Money became nearly worthless.
The interest payment on the national debt for the fiscal year starting Oct. 1, 2019, will be $479 billion. By the following fiscal year, the interest payment will be one dollar of every ten dollars in our federal government budget.
The next Congress we elect needs to address this issue.