Finley: Debt is real Trump budget cruelty
Every day comes another headline decrying the inhumanity of President Donald Trump’s budget cuts, and warning of the carnage they’ll wreak on America’s social fabric.
Taking a mere $54 billion out of a nearly $3.8 trillion federal spending plan will ruin the environment, starve the poor, doom the elderly and create general suffering throughout the land.
So critical is every dollar the federal government spends that trimming roughly 2 percent will destroy our national quality of life.
Meanwhile, the national debt clock keeps ticking toward the $20 trillion hour, a milestone it should pass in the next few days. The individual share of that obligation for every citizen is $61,200, and for every person who actually pays federal taxes it’s $165,653.
In March, debt service payments were $7 billion higher than they were a year earlier, according to the Congressional Budget Office, and in the first six months of fiscal 2017, the year-over-year hike was $28 billion, or 22 percent, making it the largest category of increased federal spending.
CBO estimates that if interest rates rise just 1 percent over projections,$160 billion more each year will be required for debt service. That’s three times the amount Trump hopes to cut from targeted programs.
Inevitably, the national debt ceiling, reimposed last month, will have to be raised again this fall to keep feeding the federal leviathan.
The debt total has become so ridiculously out of reach that we’ve stopped seriously thinking about it. In President Barack Obama’s eight years, the national debt doubled, and yet that fiscal atrocity barely surfaced as an issue during last year’s presidential election.
Obama benefited from falling interest rates, which kept the cost of servicing the national debt fairly stable, despite the sharp increase in borrowing. But with the Federal Reserve pushing rates up, the folly of putting so much new spending on the credit card is becoming painfully evident.
Interest payments currently consume about 6.5 percent of the federal budget, or $266 billion, making it the fifth largest budget line item behind defense, social security, Medicare and Medicaid.
In two years, the Office of Management and Budget predicts interest rates will rise to nearly 4 percent, pushing debt service payments to $474 billion, or nearly 10 percent of the federal budget. By 2026, those amounts rise to $787 billion and 12.2 percent of spending.
And even though we’re dedicating such a huge chunk of federal revenues to the national debt, the amount owed keeps going up, because all we’re paying is the interest, without denting the principal, while we continue to borrow.
A nation unwilling to make even the thinnest of spending cuts has to borrow increasing amounts to maintain programs and add new ones, while meeting the rapidly rising debt payments.
To say this is unsustainable is to state the obvious. But at this point, even a sincere commitment to fiscal discipline won’t defuse the debt time bomb. Doing that will require an austerity that Americans have not endured in modern times, and likely couldn’t stomach. Frankly, it means weaning the citizenry from the federal teat.
Or raising taxes on everyone.
The cruelty of Trump’s budget isn’t that it cuts a few programs (while, by the way, diverting the savings to defense priorities and adding another $400 billion to the national debt), but that it doesn’t cut anywhere near enough to head off the coming meltdown.