The country was steamrolled by the coronavirus, and the economic stimulus packages to help businesses and individuals have been staggering in cost. Admittedly, the aid was necessary. But it has left the nation with a mammoth $3.7 trillion deficit.
Before further stimulus packages are passed by Congress and signed by President Donald Trump, those leaders should commit to whittling down the nation’s $24 trillion in total debt, starting with the next federal budget that begins Oct. 1.
Focusing on the U.S. debt at a time when tens of thousands of Americans are dying and millions have lost their jobs might seem petty and irrelevant, but the unchecked spending in the past two months to counter the economic impact of the disease is alarming.
The $2.9 trillion in coronavirus stimulus aid already passed — with considerably more being discussed by congressional leaders — will push this year’s federal deficit to $3.7 trillion. That’s the level of spending this year that exceeds the amount of revenue collected.
Not since the end of World War II has the nation’s deficit as a share of the main economic measure, gross domestic product, risen so fast and so high. The Congressional Budget Office projects this fiscal year’s deficit will amount to nearly 19% of the GDP and the nonpartisan Committee for a Responsible Federal Budget projects total U.S. debt will be 101% of the GDP.
The deficit proportion is twice as large as in any year since 1945. The total debt is forecast to climb to $30 trillion within five years, or to about $100,000 per American.
Worse, the skyrocketing deficit stems not from spending that will spur growth, but from spending simply trying to restore the status quo of a few months ago. Crushing debt without growth is not a best practice.
The lofty spending does not pose an immediate problem, as the Federal Reserve has lowered interest rates so it can borrow money at almost no interest. But tamed inflation will not last forever, and rising inflation would increase the country’s borrowing costs. And many economists maintain that high government debt curbs private investment, and that harms economic growth.
As the pandemic unfolded in March across the United States, Treasury Secretary Steven Mnuchin told the Washington Post: “Interest rates are incredibly low so there’s very little cost to borrowing this money. In different times, we’ll fix the deficit. This is not the time to worry about it.”
We disagree. Getting spending under control is critical and should be a foremost priority as Trump and Congress put together the next fiscal year budget. As some leaders are expected to push for huge programs, often without funding, deficit hawks in Congress must vocally build support to corral the 2020-2021 budget.
Balanced federal budgets, sadly, disappeared in 2001. To keep the debt from becoming a burden on our children and our children’s children, Congress and the president should assemble the next federal budget with a firm commitment to keep the annual deficit under $1 trillion and to adopt a plan to balance the budget within five years.