I'm mostly supportive of Trump's national security strategy as outlined on Monday, but I believe the president is neglecting one crucial issue: the national debt.
After all, while Trump's strategy document is 56 pages long, it references the national debt only three times. All of those mentions occur in the following paragraph.
REDUCE THE DEBT THROUGH FISCAL RESPONSIBILITY: The national debt, now over $20 trillion, presents a grave threat to America’s long-term prosperity and, by extension, our national security. By restraining Federal spending, making government more efficient, and by modernizing our tax system and making our businesses globally competitive, our economy will grow and make the existing debt more serviceable.
My concern here is twofold.
First off, while the strategy document notes that the national debt of over $20 trillion is a "grave threat" to prosperity and security, it offers nothing meaningful on how to address that debt. Instead, it focuses on tax reform and that most typical and overworn of inside-the-Beltway platitudes: "making government more efficient."
Don't get me wrong, I'd love to cut 20 percent of the federal workforce and eliminate thousands of government programs. But doing so would only represent a drop in the ocean of what it will take to seriously reduce the national debt. And while the pledge to modernize the tax system and make American business more competitive will likely lead to higher economic growth, that growth will not be enough to offset trend spending increases and thus cut the national debt.
Yes, the document talks about "restraining Federal spending," but here we know that Trump is talking about discretionary spending and not structural spending like Medicare and Social Security, which he has pledged to leave unchanged. This matters because entitlement programs are the core drivers of the national debt. As the Congressional Budget Office noted in its most recent long-term fiscal outlook, those programs will lead to debt-to-GDP ratios soaring above 100 percent. To contemplate the scale of the challenge here, consider the two charts below.
At the same time, the CBO assesses that "The government’s net interest costs are projected to nearly double as a share of the economy over the next decade — from 1.4 percent of [gross domestic product] GDP in 2017 to 2.7 percent by 2027— as currently low interest rates rise and as greater federal borrowing leads directly to greater debt service costs. In the extended baseline, those costs reach 6.2 percent of GDP by 2047."
To put that in context, with U.S. GDP currently at $19.5 trillion, the difference from the current 1.4 percent to 2.7 percent net interest payment would be an additional $253 billion. The difference from 1.4 percent to the 2047 projection of 6.2 percent would be an extraordinary $947 billion. That's far more than the 2018 non-nuclear defense budget, which seems set to end up at around $626 billion. Moreover, these net interest payments are simply the premium of what government must pay those it has borrowed from: the bulk debt will keep growing.
This speaks to the broader crisis.
As I've explained, the national debt is a huge threat to our better future. Threatening to crowd out private sector investment, demolish the economy, and subsume government revenues to the trough of entitlement programs, it would render younger Americans to second-rate lives.
Trump is wrong to neglect this reality.