I’m beaten down.
I’m not moonlighting as a cage fighter. I’m a registered voter in a swing state.
For those of you who don’t live in Florida, Ohio, or Pennsylvania, just imagine your phones (mobile and land lines) ringing off the hook between 7 a.m. and 10 p.m. with “surveys,” “polls,” and recorded messages. My good ole fashioned mailbox has looked like a political polling station, jammed full of glossy flyers explaining why one candidate or the other is “right” for me and the country.
I’ve been barraged with leading questions about emails, sexually explicit statements, and the candidates’ various positions on domestic social programs and intervention in foreign lands. It’s been a swirling mess of message and misdirection, and no one’s happier than me that the entire, wretched affair is just about over.
But through it all, I wish I heard more about one thing.
Amidst all the conversation about historical statements, innuendos, and fluffy talk on values, no one ever discussed a real issue that the next president could actually address: the U.S. debt. It’s near $20 trillion, and counting.
The candidates made passing reference to the debt, claiming their programs wouldn’t add to the totals, but that’s not my point. No one spoke seriously about not only ending deficit spending, but also paying down the debt we currently owe.
Without such a conversation, we’re doomed to watch our debt explode.
It won’t haunt us today with interest rates hovering at exceptionally low levels…
But the 2020s are just around the corner. And with the new decade, we’re likely to enter an era of normalized interest rates, which will cause our annual interest cost to soar, crowding out other spending, and leading to, you guessed it… more debt!
Whoever takes the oath of office as the 45th president of the United States early next year, that person will preside over an expected budget deficit just greater than $500 billion, which will push our national debt above $20 trillion.
Government agencies and departments like Social Security hold roughly $5 trillion of this debt, leaving a little less than $15 trillion in public hands. Currently the average interest rate on U.S. government debt sits under 2% and our net interest cost was $223 billion last year. Sticking with round numbers, the federal budget for this fiscal year is about $4 trillion, so interest payments eat up 5% of the budget.
Over the next four years, debt outstanding will grow…
Social Security and Medicare both run deficits, so these programs are selling their U.S. Treasury bonds, not buying more, increasing the share held by the public. Overall, the Congressional Budget Office expects the public holdings to reach $16.7 trillion by 2020.
I think this is overly optimistic, since it also assumes that GDP will grow faster than 3% (even though it hasn’t in 11 years) and that Congress won’t keep extending idiotic, one-off, tax relief programs.
But for amusement, let’s stick with their numbers.
If the average interest rate on our debt holds at 2%, we’ll pay $324 billion in interest. If rates jump to 3%, the cost goes to roughly half a trillion dollars a year, for just interest. And if the average interest rate climbs to 4%, a level that was considered exceptionally low from the 1960s through the mid-2000s, we’ll pay over $650 billion per year in interest.
The increase in interest cost, from $223 billion to more than $600 billion, will eat up between 5% and 10% more of the overall budget, at the same time that we’re dealing with higher costs for Social Security, Medicare and the Affordable Care Act.
The time to do something about this is now, not when the costs are already spiraling out of control.
We need a leader, a chief executive, who will take control of the administration of this nation, setting us on the right path for economic prosperity in the years to come.
Nothing in the election process that just occurred makes me think we’ll have such a leader.
Instead, we’ll get more of the same. More promises about things the president can’t control, more platitudes about helping people through ever-bigger spending programs, and no consideration whatsoever about putting our nation on a sustainable fiscal path.
This isn’t about one candidate or the other. As I said, neither one touched on the subject beyond a throwaway line here or there. This is about what we demand of our elected officials, and what we let them ignore.
Politics is a reactionary environment, where politicians reflect the worries and wants of their constituents. If that’s the case, then Trump and Clinton rightly chose to take a pass on this issue, because we as voters did not demand answers.
We ignore the debt at our peril. When it rises to haunt us, it will be too late.