Our Budget Problems Haven’t Disappeared
Ignoring a problem never makes it go away. Dirty dishes in the sink don’t clean themselves. Procrastinating on a paper for school doesn’t get it written. Lawns don’t get mowed on their own.
The United States government has a debt problem. Last year, we had a big fight in Washington over how to deal with that. It wasn’t a productive debate. It did not end in a long-term solution.
There hasn’t been quite as much talk about the budget in Washington, but the dirty dishes of debt keep piling up. Arguing and shutting down the government won’t fix the problem. It’s going to require compromise to get a solution, courage to pass legislation and then perseverance to make sure it is held to.
First, let’s look at the problem again. Right now, our national debt is over $17.7 trillion, an increase of $7 trillion from 2008. By the end of this year, federal debt held by the public will reach 74 percent of our annual GDP. The Congressional Budget Office estimates that it will climb to 111 percent by 2039. That would be unsustainable.
Those are big numbers, but they have a real impact. Last year, we paid $221 billion in interest on the debt. In ten years, annual interest rates could quadruple. Wouldn’t we rather spend those billions of dollars on something worthwhile? Money spent on interest doesn’t help anyone and hurts our economy and job growth.
The reality is that debt payments will be growing at the exact same time that important programs like Medicare and Social Security will be facing funding crises. Every dollar spent on keeping our creditors at bay is a dollar less for critical medical care and support for older Americans.
The trust fund for Medicare’s hospital insurance program will be depleted by 2030. That means that if we do nothing, hospitals could get a 15 percent cut to reimbursements in a single year. Inevitably, it would make getting care at a hospital more expensive and more difficult.
The Social Security trust fund is currently projected to be depleted just three years later. By current law, there would be an instant 20 percent cut to payments to seniors. Imagine trying to shop or pay the bills with that much cut out of your budget? That could be what millions of seniors are facing in less than 20 years.
The best way to tackle debt is economic growth, but that’s been a problem here in the United States also. Since the economic downturn, annual growth has only been at 1.1 percent and even the optimistic projection of the Congressional Budget Office says that over the next ten years it could average 2.5 percent. That is just barely enough to create jobs for the millions of Americans entering the marketplace every year.
It’s not that Americans aren’t paying a lot of taxes. In fact, the federal government has been collecting record amounts of revenue in the past few years. Government spending, however, is up. Federal spending averaged around 20 percent of the economy for much of the past 40 years. But now for the last four years, that has increased to 22.8 percent. Small numbers here make a big difference, especially since government revenue as a percentage of the economy is basically unchanged. Spending has grown tremendously, tax revenue has not.
Last year, after fighting to the point where Democrats and Republicans couldn’t keep the government open, we effectively declared a truce and passed a budget agreement for 2014 and 2015. I supported this agreement, knowing that more argument wasn’t going to solve the problem.
We’ve had relative budget peace in Washington this year, but the problem is far from solved. This is not an easy problem to solve, and it is going to require a far more civil discourse then we saw in 2013.
Next year, no matter who wins out in the elections, Congress will have to create a new budget. It is my hope that we can make real progress on moving back to a balanced budget and away from massive deficits. Ignoring the problem longer, only makes cleaning it up harder and more painful.