Opinion: Washington is headed where Detroit once was
The U.S. House of Representatives just passed a two-year budget deal that will bust the spending cap by $320 billion and put our country on a fiscal trajectory that the Congressional Budget Office called its “worst-case scenario.”
Worst case, indeed.
At a time when the federal debt has surpassed $22 trillion, lawmakers have voted not to address the explosion of debt, but to add to it. Over the next decade, this latest bipartisan budget deal will increase federal debt by $1.7 trillion beyond the already-baked-in debt of $12.4 trillion.
Fiscal watchdog groups from across the political spectrum slammed the deal as reckless and irresponsible. The nonpartisan Committee for a Responsible Federal Budget said the deal “may end up being the worst budget agreement in our nation’s history.”
This week the 2020 presidential campaign came to Detroit, a city that knows first-hand what a debt crisis looks like.
In 2013, the Motor City, more than $18 billion in debt, filed for Chapter 9 bankruptcy protection, the culmination of decades of poor policy choices and economic decline. As the city lost population and unemployment soared, the city went deeper and deeper into debt until it couldn’t maintain essential services or pay its bills.
What did that mean for the people of Detroit? Some 40% of the city’s streetlights not working, 78,000 abandoned or blighted homes, unreliable trash collection, police response time of up to 58 minutes, slow ambulance services, high arson rates and an appalling violent-crime rate. It also meant the highest income and property tax rates in the state.
Unlike Detroit, the U.S. government can’t declare bankruptcy to get out from under its mountain of debt growing at more than $1 trillion a year. But even without bankruptcy, that’s a recipe for an economic catastrophe that would make the 2008 financial collapse pale in comparison. And when it comes, it will be programs like defense, Medicare and Social Security that take the biggest hits.
To avoid that outcome, we are going to have to get serious about reining in out-of-control spending.
Sadly, there seems to be no appetite in Washington — in either party — to change direction, with some in Congress pushing a “Medicare for All” proposal that would cost at least $32 trillion over 10 years.
There is no combination of taxes proposed or dreamed of that could begin to pay for all of this without wrecking the economy.
And remember, these numbers are just for the next decade. Any new entitlement program — or any expansion of an existing one — would create obligations far into the future, with costs running into the hundreds of trillions of dollars.
For just two of the existing programs — Social Security and Medicare — unfunded benefits over the long term total $56 trillion.
If we want these programs to be there for people who need them in the future, we have to act now to fix them.
Just five years ago, Detroit was in bankruptcy, and it still has a long way to go. Whatever the eventual outcome for the city, it will remain an object lesson about what happens when government doesn’t live within its means, then has to act in a crisis.
We do not need a repeat at the national level. We need to stop the spending binge now, before the crisis arrives, before we have dug a hole for ourselves so deep that we, our children and our grandchildren can’t get out of it.
Alison Acosta Winters is a senior policy fellow at Americans for Prosperity. Russell Latino is vice president, economic opportunity portfolio, at AFP.