Get Educated

Stay up to date with email updates
Economy

An Unfortunate Milestone: Our National Debt Has Reached $21 Trillion

posted on April 3, 2018

“Blessed are the young, for they shall inherit the national debt,” stated President Herbert Hoover. Once again, the nation hit a record as our national debt has risen to $21 trillion. This does not include the trillions in unfunded liabilities from entitlement programs such as Social Security, Medicare, and Medicaid. This month also marked another unfortunate event when the federal government added $1 trillion to the national debt. Congress is also in the process of finalizing a $1.3 trillion spending bill in order to keep the government funded.

The $21 trillion national debt and the continuing out-of-control spending is a serious problem that can no longer be ignored. Michael Tanner, a Senior Fellow with the Cato Institute, placed the national debt in context:

We now owe more than $21 trillion in debt, more than 100 percent of GDP, and roughly $65,000 for every man, women, and child in this country. With annual deficits projected to exceed $1 trillion for as far as the eye can see, the debt is expected to top $23 trillion within a decade. From there the sky is the limit as the unfunded liabilities of programs such as Social Security and Medicare kick in.

The federal government clearly has a spending problem. Many progressives and liberals argue that higher taxes are needed to finance the cost of government programs, but the problem is not insufficient revenues. Walter E. Williams, the distinguished economist at George Mason University, wrote that “tax revenue is not our problem.” As Williams explains:

The federal government has collected nearly 20 percent of the nation’s gross domestic product almost every year since 1960. Federal spending has exceeded 20 percent of the GDP for most of that period. Because federal spending is the problem, that’s where our focus should be.

The blame for reckless spending can be placed upon both political parties. Senator Rand Paul (R-KY), who is one a few members of Congress trying to limit spending recently described the nature of the problem:

Republicans say they want to cut domestic spending, but they won’t because they’ve made a deal with the Democrats — if Democrats vote to raise military spending, Republicans will vote to raise domestic spending. The dirty little secret is that all spending goes up, all the time, and both parties are to blame. Both sides want to spend money, but for different pet causes. The compromise: Both will agree to increase rather than decrease spending. We will once again move in the wrong direction on spending and debt because of a corrupt bargain among swamp-dwelling politicians.

Senator Paul is correct and this is what is happening with the current $1.3 billion spending bill before Congress. As Michael Tanner writes:

Democrats are reportedly set to get a $63 billion increase in domestic discretionary spending, including a $15 billion bailout for insurance companies under Obamacare. Meanwhile, Republicans will receive $80 billion in additional spending on the Pentagon.

It is unfortunate that with the Republican Party in control of the federal government that no serious attempt has been made to restrain government spending. The Republican Party is supposed to be America’s conservative party, which includes being fiscally conservative. Paul Winfree, Director of the Roe Institute for Economic Studies at The Heritage Foundation, described the spending bill as a “betrayal.” As Winfree stated:

Congress has repeatedly promised to fix the spending problem in Washington, but this bill promises trillion-dollar deficits as far as the eye can see. Worse yet, this omnibus completely abandons any attempt to repeal or roll back Obamacare. Instead, a Republican-controlled Congress now appears that it will entrench and expand Obamacare by giving billions in bailouts to insurance companies as well as additional funding for outreach and enrollment to prop up this failed law.

The Republican Party must realize that it is time to begin cutting federal spending. President Donald Trump and the Republican Congress are enacting a pro-growth economic agenda with the Tax Cuts and Jobs Act and unshackling the economy from excessive regulations, but spending reductions must be a part of this fiscal agenda.

The United States cannot continue to spend recklessly. The $21 trillion national debt is a national security issue and it is a moral issue. Governments, whether at the federal, state, or local level, cannot tax and spend their way into prosperity.

President Herbert Hoover’s adage is correct, “Blessed are the young, for they shall inherit the national debt.”