In 1990, Republican allies of President George H.W. Bush urged him to raise taxes and cut spending to shrink the budget deficit.
“OK, go for it, but it will be a real punch in the gut,” the former president declared, knowing the political heat he would take. “When the really tough choices come,” he said, “it’s the country, not me.”
Bush predicted correctly. Americans punished him for his actions, electing Bill Clinton in 1992.
Thanks in part to Bush’s political sacrifice, the U.S. ran budget surpluses from 1998 to 2001. Every year since, we’ve spent more than we’ve earned. Our national debt is now over $31 trillion, its highest point ever.
Politicians learned their lesson
Today’s Democrats have discovered the politically expedient way to handle the national debt — they pretend it doesn’t exist. Democratic candidates simply avoided the issue in the 2020 presidential primary debates. That’s unsurprising, because their party platform fails to even mention the national debt.
Meanwhile, Republicans pay lip service, but they too lack the courage to act. During President Donald Trump’s first two years in office, Republicans held the House, Senate and presidency. They had every chance to prove their fiscal responsibility.
They didn’t. Instead, they produced a nearly $8 trillion deficit during Trump’s tenure. Much of that deficit was created before any COVID-19 relief spending.
The crisis can’t be ignored
Some claim the U.S. can continue to sustain larger and larger deficits without any concern. An ever-growing national debt is good, they say, because it spurs economic growth.
Not so. The World Bank found if a country’s debt-to-GDP ratio exceeds 77%, then more debt actually causes a decline in economic growth. Experts disagree about the threshold value (estimates range from 20% to 106%), and some experts dispute the existence of a threshold common to all countries. However, evidence overwhelmingly supports the view that large government debt negatively impacts economic growth.
Since 2020, America’s debt-to-GDP ratio has been over 120%, surpassing any threshold identified in the literature.
The current path is unsustainable
Here’s what will happen if we maintain our current trajectory:
Our budget will be strained. Taxpayer dollars will be diverted from necessities, like health care, welfare and defense to pay for rising interest obligations.
Interest rates will skyrocket. Investors will demand higher rates on Treasury bonds as higher debt levels make them riskier investments. As bond yields rise, interest rates on mortgages, car loans and credit cards will follow.
Entitlement funds will become insolvent. Medicare Part A reserves will be depleted by 2028. Social Security reserves will be depleted by 2035.
National security will be threatened. According to Adm. Mike Mullen, the former chairman of the Joint Chiefs of Staff, “The most significant threat to our national security is our debt.” With large portions of our debt held by foreign investors, foreign leverage over our economy will increase. Meanwhile, our ability to pay for military resources will decrease.
Inflation will soar. The New York Times reported that consumer demand, fueled by government spending, accounted for roughly 60% of inflation from 2019 through 2021. Over the past year, the cost of living for each American household has increased by roughly $9,000. The worst part? Inflation hits the poor the hardest. Reckless fiscal policies make the problem worse.
The way forward
Lowering the national debt will require sacrifices from Americans of all persuasions.
The bipartisan Simpson-Bowles Commission, created by President Barack Obama in 2010, provides a helpful starting point.
The commission created a deficit reduction package that included pain points for both Republicans and Democrats. The package would have (among other things):
- Capped government spending at 21% of GDP.
- Cut $2 to $3 in spending for every $1 it raised in new taxes.
- Raised Social Security’s retirement age to 69, but only for the nation’s youngest workers.
- Removed the mortgage interest tax deduction.
The package was obliterated by a margin of 382-38 in the House. Republicans refused to entertain tax increases, and Democrats refused to entertain cuts to Medicare and Social Security, even for the young and wealthy.
Congress missed the mark. Simpson-Bowles represented a rare bipartisan effort, the kind Americans desperately need to solve the crisis.
The final word
Fellow young Americans: It’s time to face reality. Our elected officials lack the courage to tell us the hard truth — that we all need to sacrifice some present comforts to avoid a future catastrophe. Instead, they try to buy our votes, spending irresponsibly to shore up their next elections.
We will suffer the consequences. The Fiscal Times reported the national debt has “robbed” young Americans of our “birthright” and we will be the “first generation whose prospects are lower than those of our parents.”
It is up to us to restore America’s fiscal responsibility. Our futures depend on it.
Brad Barber is a recent graduate of Brigham Young University and Harvard Law School. He previously worked as a law clerk in the White House Office of Management and Budget. He is now an attorney practicing in Salt Lake City.