When the U.S. Congressional Budget Office quietly released their 2019 Long-term Budget Outlook, they were counting on the American public to focus on distractions like Amazon Prime Day and ignore the absolutely dismal predictions delineated in the report. I can assure them, however, that the public is smarter than they think and we’re watching the numbers very closely.
When I saw the phrases “unsustainable path” and “unprecedented levels” in the report, for a moment I thought I was reading an alternative media blog post. But no, it’s the government actually admitting that they’re levying a colossal tax on future generations by racking up debt and having no real plan to ever pay it off.
I can’t make this stuff up, folks: “Large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels—from 78 percent of gross domestic product (GDP) in 2019 to 144 percent by 2049.” There’s no mea culpa or admission of guilt here, but at least they’re finally starting to sound the alarm on this long-standing problem.
Interestingly, this report was released at around the same time that Federal Reserve Chairman Jerome Powell highlighted the national debt in his testimony to the House Financial Services Committee, saying that “The United States’ federal budget is on an unsustainable path in the sense that spending is growing faster than the economy… I think we’re racking up greater and greater debt.”
You “think” we’re racking up greater and greater debt? I know we are, Mr. Chairman – go visit the National Debt Clock in Manhattan (or the online version here) and watch the numbers whizz by. Currently, we’re up to $22.5 trillion in debt, or $183,000 per taxpayer.
Courtesy: U.S. Congressional Budget Office
And it’s only going to get worse. According to the Congressional Budget Office’s projections, the debt-to-GDP ratio will, within the next 30 years, eclipse the level reached during World War II. At least back then we were funding a war – what’s our excuse
The mounting debt will be primarily driven by budget deficits, which are expected to increase from 4.2 percent of the GDP in 2019 to 8.7 percent of the GDP in 2049. It’s a vicious cycle, since the spending on the interest on the debt will account for most of the deficit growth – and don’t expect any reduction in the interest payments, as the “net outlays for interest” will “more than triple in relation to the size of the economy over the next three decades.”
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Joseph Minarik, the former chief economist at the Office of Management and Budget, called the projected 144 percent debt-to-GDP ratio “genuinely scary,” citing the pace at which the debt is mounting and the lack of any indication that it’s going to turn around. Bipartisan Policy Center Senior Vice President G. William Hoagland added that “It’s a hard one for politicians who are worried about the election, two years down the road, or six years down the road, to think out that far.”
Politicians are indeed notoriously shortsighted, and thinking 30 years into the future isn’t high on their list of priorities. In order to truly start to fix this, they would have to address entitlement program spending, including Medicare and Social Security – political mine fields they’d rather not cross given the upcoming election cycle.
Courtesy: U.S. Congressional Budget Office
Congress knows full well that they’re not going to slash these entitlement programs – that would be political suicide. Baby boomers will live longer than any previous generation ever did, so they’ll be voting in at least several more election cycles; hence, for the time being at least, you can count on the politicians to continue funding these programs.
In doing so, they’re screwing over millennials and their successors, Generation Z, who are still in school now and have no clue what their future will look like. They’ll have to fend for themselves as the lifelines provided by Medicare, Medicaid, Social Security, and other programs will be little more than a historical footnote.
It’s easy for politicians to bloviate about debt and deficit reduction, but the devil’s in the details and I still haven’t seen a detailed plan from any Congressman. They say that admitting you have a problem is the first step towards recovery – but without an admission of guilt and a plan to solve the problem, Congress remains as debt-addicted as ever.
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