When the covid-19 pandemic eventually recedes, its global costs will become clearer. Paradoxically, that accounting begins with hardships that cannot be calculated: the suffering of so many families, communities, nations.
Those human losses are paramount. Yet they aren’t the pandemic’s only lethal legacies. National governments worldwide—ours in the forefront—have fought the pandemic and its side effects with borrowed money. Much of this new debt will fall not only on today’s children and grandchildren, but also on our descendants not yet born.
Meanwhile, Senate Democrats say they intend to pass a sweeping social, educational and environmental package they price at $3.5 trillion. That’s not to be confused with previous covid-19 relief spending, or a separate and not yet approved outlay on infrastructure.
Because a trillion of anything is a million millions, the formidable term “deficit of $3 trillion” befuddles many Americans, journalists included. The temptation is to toss one’s fidgety hands in the air and mutter that these debts belong not to us individual Americans but to a faceless federal government.
Ah, problem already. That government is essentially a big checking account with a standing army; it collects and spends tax dollars. As our national debt rises daily toward $29 trillion, the government’s perpetual printing of new dollars threatens to cheapen the currency. In short, we—or our progeny—have to repay every dollar now being lent to Washington by China and other buyers of U.S. bonds.
Which raises a question we hope Illinoisans will direct to their members of Congress: When does necessary spending on pandemic relief mutate into optional spending on the desirable but unaffordable?
We argue that unchecked cycles of spend-borrow-repeat eventually enfeeble any nation. That may not happen while interest rates are as low as today’s. But those rates—the relentless cost to taxpayers of carrying so much debt—now are likelier to rise than to fall.
Thus far in the pandemic, global securities markets happily support all of our borrowing; because of its prosperity, America is a safe haven for investors.
To reiterate arguments you’ve read here before: We write often about debt in part to counteract the popular (and in Illinois, political) tendency to see borrowed money as free manna that somebody else will worry about, someday. The truth is that, whether it’s enforced or nominally forgiven, someone always pays.