No One Is Talking About the National Debt

How did this happen? No, I’m not talking about the 50-year-old couple who suddenly find out they are having another child. I am talking about the exploding national debt, which many experts warn could irreparably damage the nation’s economy if not confronted soon.

None of the presidential candidates are talking about it in a substantive way. And they should be.

Before the pandemic, the United States’ publicly held debt was $17.2 trillion or 79% of America’s GDP. Today that debt is $28.3 trillion or 95% of GDP, and according to the Congressional Budget Office (CBO), it is projected to grow to 122.4% of GDP by 2034.

Another sobering statistic: The interest cost of the U.S. debt hit 11% of our total 2023 government budget and is forecast to reach 17% ($892 billion) this year, exceeding the country’s $824 billion military budget.

The chief culprit, as you may suspect, is an explosion in government spending by both the Trump and Biden administrations, despite tax and revenue collections increasing about 7% annually over the past five years. Both presidents spent trillions rescuing America from a pandemic-induced depression. Had they not, and government deficit spending remained consistent with pre-pandemic levels, the debt today would be around $21 trillion or 71% of GDP.

Most of us would agree the government’s pandemic spending probably saved the nation’s economy as intended, although we can quibble about the amount spent and how it was spent. But today’s issue is how servicing these higher debt levels might impact the nation’s economy in the long run.

Interest payments on the national debt in coming years are expected to become the second-largest expenditure in the U.S. budget, falling behind only Social Security payments. And going forward, if deficit spending continues, the debt will also grow, as will interest payments. Within a decade, these interest payments could start gobbling up tax dollars that would otherwise be spent on education, transportation projects, welfare, healthcare, housing and environmental programs.

What’s the answer? Here are some ideas:

• Grow America’s economy. That’s the top priority.
• Revamp entitlements like Social Security and Medicare, and probably make them means tested. Wealthier individuals don’t depend on these benefits.
• Control government spending, perhaps freezing it at current levels and adjusting only for inflation.
• Suspend most federal hiring and allow normal attrition to reduce unnecessary and redundant government positions.
• Increase tax revenues by pruning deductions for higher-income citizens who don’t depend on benefits like mortgage-interest write-offs and tax-free healthcare.
• Increase corporate tax collections by eliminating deductions and loopholes.

All this and more could be part of a decade-long program to rein in U.S.-debt growth and show the world that America remains fiscally responsible. Remember: Some 23% of U.S. debt is held by the international community, and they might eventually lose faith in our ability to control our economy. That would create catastrophic economic pain.