The U.S. is now $39 trillion in debt. Politicians have been fighting over the federal spending for decades and even briefly balanced the budget at the end of then-President Bill Clinton’s term. But there are concerns the gap between the nation’s income and outlays will soon produce real consequences.
The federal debt has “surged under both Republican and Democratic presidents,” said The Associated Press, but it is growing faster than ever: The number “hit $38 trillion five months ago — and $37 trillion two months before that.” That rate makes it likely the government “will hit a staggering $40 trillion in national debt before this fall’s elections,” said Michael Peterson of the nonprofit Peter G. Peterson Foundation, which focuses on fiscal issues, in a statement. The consequences may include “higher borrowing costs for things like mortgages and cars” and “more expensive goods and services,” said the AP.
The debt milestone is an important “moment in the nation’s accelerating self-assassination,” George Will said at The Washington Post. Interest payments on the debt are already the “fastest-growing part” of the federal budget and could reach $2 trillion annually within a decade. One reason for the balloon is the growing cohort of voters over age 65, who vote to “defend and enlarge their benefits” while leaving the next generation to pay the costs. That creates a danger. The bigger the debt is as a share of the economy, the “less leeway government has to respond to recessions or other economic shocks.”
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It is “getting harder to kick” the debt can down the road, Timothy Nash and his co-authors said at RealClearMarkets. The debt now totals about 125% of the gross domestic product, up from 36% in 1981. That threatens American power. The Roman Empire collapsed “after decades of fiscal strain, inflation and military spending,” while Germany’s Weimar Republic failed after “economic instability and runaway inflation destroyed public confidence in the currency.” Unless the U.S. finds fiscal discipline, the debt “risks eroding the very economic foundation that made America prosperous in the first place.”
Congress should establish a “bipartisan fiscal commission,” David K. Young said at Fortune. That would “not solve the problem overnight,” but it could “focus both political parties on finding a solution” while bringing “bipartisan credibility to reforms.” For a commission to be successful, “everything must be on the table,” reviewing all spending and revenue sources. One thing is clear: “The U.S. debt crisis is already here.”
What next?
The U.S. continues to add to its “red-ink balances,” said Politico. The Congressional Budget Office reported in February that the annual budget deficit will likely reach $1.9 trillion this year and grow to $3.1 trillion by 2036, which is expected to help create a $64 trillion national debt within a decade. Interest payments and “spending on safety-net programs” are predicted to drive the “expanding gap” between revenues and spending.
