Jacques: Our government's got to curb its spending addiction
On the drive home from work last Wednesday, I heard two news stories that struck me.
The first highlighted how President Donald Trump took executive action that day, automatically forgiving the student loan debt for totally and permanently disabled veterans. A debt forgiveness program already exists, but vets had to apply for the debt relief and the complicated process deterred many from seeking it.
If there’s any group of students who deserve our help, it’s these veterans. Estimates are that the 25,000 vets who qualify for relief have about $30,000 each in debt. So taxpayers are on the hook for covering $750 million.
That’s nothing compared to some of the wild debt-forgiveness and free college plans Democratic presidential contenders like Bernie Sanders and Elizabeth Warren are floating.
But it’s still a lot of money. And the government, even under Trump, is too carefree about how it's going to pay for its generosity.
That’s why this other story especially stood out. It centered on a warning from the nonpartisan Congressional Budget Office, which is predicting the budget deficit will reach nearly $1 trillion (with a t) this fiscal year — a number that’s spiked thanks to the irresponsible bipartisan budget agreement lawmakers forged this summer, which hiked spending on national defense and domestic programs.
That means without some serious cuts to government spending, expect our $22 trillion national debt to keep growing at this unsupportable pace.
I have a feeling most people’s eyes glaze over when they hear about federal deficits and debt. When numbers get that big, they don’t seem real, and they are difficult for the average person to fathom.
So please bear with me. This should matter to every American.
As CBO Director Phillip Swagel stated: “Federal debt, which is already high by historical standards, is on an unsustainable course, projected to rise even higher after 2029 because of the aging of the population, growth in per capita spending on health care, and rising interest costs. To put it on a sustainable course, lawmakers will have to make significant changes to tax and spending policies — making revenues larger than they would be under current law, reducing spending below projected amounts, or adopting some combination of those approaches.”
Swagel also points out that these high deficits are projected to grow federal debt to 95% of GDP in 2029 from 79% in 2019.
Justin Bogie, senior policy analyst in fiscal affairs at The Heritage Foundation, explains why those numbers are troubling. He says research has shown that “when a country sustains a high level of debt (approximately 90% of GDP) over several years, it creates a drag on economic growth.” That could mean thousands of dollars less in take home pay for workers, he says.
Bogie says slimming the budget isn’t promising because lawmakers, Republicans and Democrats alike, have no desire to tackle Social Security, Medicare and Medicaid, even though entitlement spending combined with interest on the national debt is driving almost 75% of spending growth over the next decade.
Given the real impact all this spending will have on Americans -- sooner or later -- lawmakers should find the wherewithal to make tough choices.
“There’s a bottom line that one day, some generation is going to have to pay for all of this deficit spending,” Bogie says. “That could come in the form of much higher taxes, less government services, or both. It is highly likely that younger and future generations will feel the brunt of those negative consequences.”