Ever-increasing debt will harm future generations
FILE - This Sept. 24, 2013 file photo shows a sheet of uncut $100 bills as they make their way through the printing process at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas. The new $100 bill, with a number of an array of high-tech features designed to thwart counterfeiters, will finally get its coming out party on Tuesday, partial government shutdown or not. The Federal Reserve, which has not been affected by the shutdown, will have armored trucks rolling from its regional banks around the country headed to banks, savings and loans and other financial institutions with the new C-notes.
Suppose you have a child, or you have a grandchild, or you know and love somebody else’s child. Pour everything you have, every virtue you know, into that little pumpkin. Because if you do endear yourself as a pleasant memory, maybe little Jason or Jennifer won’t spend an entire adulthood shrilly condemning you for being one of those selfish thieves.
That’s a label today’s generations of adults will lavishly deserve - unless, that is, we stop spending gazillions of dollars that we don’t have. Rather than pay our generations’ costs of running our federal, state and local governments, we’re perpetually borrowing ever more gazillions and sticking all the Jasons and Jennifers with the devastating task of paying off our debts. Plus decades of compound interest.
The extent of our greed came a little clearer this week: The Congressional Budget Office, the closest we have to a nonpartisan broker, issued its annual projection of long-term federal finances, a trend line CBO says is unsustainable. As in: If you Americans don’t slow the growth of your debt, your government will collapse in a heap. Simple as that.
It’s less a new message than one refined by fresh and alarming data. Before we frighten you with a few numbers, here’s the election-season takeaway: If you hear any politicians react to this CBO news by saying this year’s federal deficit will be only a half-trillion dollars so we don’t need to reform retirement programs and other spending, murmur to yourself: To my little Jason or Jennifer, that pol is just one more selfish thief.
All because the people we send to Washington will not make today’s and tomorrow’s federal spending conform to federal income. Not that the people we send to Springfield, or elect to many local offices, have done any better. If you budgeted the way they do year after year, you too would be as good as bankrupt.
CBO uses a metric that those of us who see economics as the dismal science easily can comprehend: our federal debt as a percentage of our total economy - our gross domestic product. That percentage has more than doubled from an uncomfortable 34 percent in 2000 to a post-World-War-II-record 74 percent in 2014. But with all of our spending and borrowing, we’re on track to rocket that percentage to 108 percent by 2040 and to 212 percent in 2085, when all the Jasons and Jennifers will be wondering what that antiquated word “retirement” meant.
Of course that is CBO’s optimistic view, which essentially assumes that congresses and presidents won’t further increase their - or rather, our - annual deficits. The CBO report also calculates an alternative view, which assumes lawmakers instead will let future deficits rise as they have in the past. Absorb all 133 pages and you’ll conclude that the pessimistic view is the more realistic one:
By that grim projection, our debt as a percentage of GDP rises to 170 percent in 2040. Extend that trend line, as the Committee for a Responsible Federal Budget did Tuesday, and in 70 years you find the Jasons and Jennifers owing more than six times the value of whatever’s left of their entire economy - 620 percent of their GDP. CRFB President Maya MacGuineas, take the microphone:
“This report shows just how dire the long-term debt situation is. . Unfortunately, the cost of this debt isn’t abstract. As CBO explains, it would lead to slower growth, higher interest rates, and less flexibility for the government to address new challenges. In only a quarter of a century, income per person could be $2,000 to $5,000 lower as a result of our growing debt levels.”
As baby boomers retire, the big entitlement programs will sink under the weight of all those federal benefits. As now projected, Social Security’s disability fund will run empty three years from now. Medicare’s hospital fund now is expected to go broke in 2030, and Social Security’s core old-age fund in 2032.
Meanwhile, at both ends of Pennsylvania Avenue, our federal politicians fret more about the Nov. 4 election than about the consequences of their financial stewardship. Many of them search incessantly for ways to dodge or kill the sequestration rules and other economies that were forced on them after tea party members swayed so many congressional races in 2010 and demanded spending restraint.
But today’s lower (if still astonishing) deficits won’t last. Starting in perhaps three years, they’ll fly to the sky. So keep reminding yourself:
We love our children, our grandchildren, our friends’ children.
We would do anything for them.
Just, um, don’t ask.
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.