When something spectacularly awful ticks up temporarily to being “only” really bad, that’s not a reason to celebrate.
Such is the case with the short-term decline in the size of the annual deficits predicted for this year. After two years of $3 trillion deficits, the shortfall in fiscal 2022 is expected to be $1.15 trillion. Even that latter number, though, is so mindbogglingly large and fiscally dangerous that it should frighten us all, not make us sigh in relief. This is especially true because the movement vaguely in the right direction is only a one-time anomaly, not a trend.
Once numbers become so big, most people lose a sense of just what those numbers mean. If someone counts aloud every single second, it would take 31.69 years to reach a billion. To reach a trillion, though, would take nearly 32 thousand years. That adds some perspective to the projection that in the next decade, the federal debt will grow from its current record of $30 trillion up to more than $43 trillion. That’s unsustainable.
The Committee for a Responsible Federal Budget, a widely respected, centrist arbiter, laid out the situation in a new fact sheet on Feb. 14. The federal debt held by the public continues to exceed the size of the annual economy, which puts it well into a serious danger zone. (The CRFB calculates the debt-to-GDP ratio at 101%; the total federal debt, including intragovernmental debt, is even worse, exceeding 120%.) And within 30 years, unless Congress finally begins showing fiscal discipline, the federal debt will be fully twice the size of the economy.
Finally, if President Joe Biden’s current high rate of inflation continues, as it looks likely to do after Tuesday’s horrid report on producer prices, and if the Federal Reserve Board boosts interest rates to combat it, then debt will grow even faster. The CRFB says that each percentage point of higher interest rates will increase 10-year debt levels by yet another $2.1 trillion. (For those counting aloud, that’s another 64,000 years!)
None of this is inevitable, though. The CRFB is full of suggestions for reducing deficits and debt, including with some reasonable reforms of Social Security and Medicare and also by readopting caps on discretionary spending. More conservative organizations such as the Heritage Foundation offer plenty of other ideas, and I’ve regularly offered more.
Active adoption of some of these proposed solutions is essential. In the end, these aren’t mere numbers without meaning. At some point, if debt levels are too high and several creditors suddenly try to “call in” the debts, the cascading direct effects, combined with likely panic, could bring the entire U.S. economy crashing down. The human toll would be enormous, quite possibly worse than during the Great Depression.
Lawmakers should recognize that the tipping point is nearly at hand. The U.S. government just can’t afford to keep spending at its current rate, much less increase spending for boondoggles such as the massive social spending pushed by Biden and Democratic leaders. The end result of overspending involves not mere accounting; it involves moral choices with desperate real-world consequences. Risking the collapse of the entire economy would be profoundly immoral. It is an avoidable immorality, and it must not be allowed to stand.
