One thing was conspicuous by its absence in the first Democratic presidential debates. No one talked about the nation’s mounting debt or about any plans to reduce growing annual deficits.
If Democrats won’t talk about it, you can be sure Republicans won’t, either. The party once known for its support of balanced budgets is largely responsible for the most recent growth in debt, approving tax cuts without any corresponding cuts to spending. President Trump campaigned in 2016 on a promise to retire the entire national debt in eight years. Instead, it is $2.45 trillion higher today than it was on Inauguration Day.
Republicans don’t want to call attention to this, for obvious reasons. Democrats, meanwhile, aren’t likely to call attention to it, either. That’s because many Democratic candidates support programs that, despite well-worn promises to tax the rich, would add greatly to the debt, as well.
Debts and deficits don’t seem so important when the economy is growing and jobs are plentiful. Like a household whose workers are used to receiving raises each year, adding debt doesn’t seem like such a risk when income is rising. But when fortunes turn, the nation’s mounting debts are likely to pose huge challenges.
Debts and deficits don’t seem so important when the economy is growing and jobs are plentiful...But when fortunes turn, the nation’s mounting debts are likely to pose huge challenges.
Reuters recently quoted Bill Hoagland, a senior vice president at the Policy Center, a bipartisan Washington think tank, who likened the situation to having termites beneath your porch. “You step on the porch and everything’s fine … Then one day, you fall through.”
Here’s what that day might look like: It could start with an event or circumstance that erodes public trust in the economy — a recession, natural disaster, war or some other unforeseen event. As the government strains to cover costs, investors begin demanding higher interest rates because of worries over risks. Washington has little choice but to print more money, leading to an inflation that reduces the spending power of all Americans. The economy contracts, jobs disappear, confidence in the nation’s ability to pay its debts drops further, and the downward cycle continues.
The nation then would be forced to cut programs in ways that today would be unthinkable. The military would suffer, as would U.S. influence abroad.
The ballooning debt also comes at a time when the nation’s population is aging, already putting strains on programs such as Medicare and Social Security.
This type of scenario already has played out in other countries that have foolishly overspent. The United States has the advantage of being the world’s largest economy and of having the world’s reserve currency. Both things make it attractive to investors and allow it to stretch the rules farther than other countries could. But this does not mean the country can avoid a day of reckoning forever.
These problems are not inevitable, nor are solutions beyond the reach of the current generation. But it is disheartening when no candidate for the nation’s highest office is willing to address it or acknowledge it as a looming problem. That will seem foolish, indeed, when the economy enters a down cycle and overspending becomes a critical issue again.