"It will take place and it will go relatively quickly. . . . If you have the right people, like, in the agencies and the various people that do the balancing . . . you can cut the numbers by two pennies and three pennies and balance a budget quickly and have a stronger and better country."
--Candidate Donald Trump in 2016, on balancing the national budget
"Nobody cares."
--President Trump adviser, on the deficit, years later
"There is one word in America that says it all, and that one word is: You Never Know."
--Joaquin Andujar
The big news this week, at least before Wednesday's circus, was that the Republicans and Democrats had finally agreed on something in Washington, D.C.--they agreed to run up even more debt on the national credit card.
It's not enough that this country has a $22 trillion-plus debt that goes up every minute. Congressional and White House negotiators have decided nobody really cares about the national debt, so spending can continue. Good times are here again! We're in the money! And other old songs.
There is one bit of good news in all this, and it's not unimportant: Negotiators pushed off the government's borrowing limit until after the next election. That way, America doesn't default on its obligations. But that news is overshadowed by a sea of debt. And it's no sea of tranquility, either. It's full of turbulent wave after wave of mounting debt that continually consumes more and more of our taxes with interest payments. But what, our betters worry?
The Wall Street Journal called it a "bipartisan compromise," and we'll just bet. After all, it's a deal worth more than $2.7 trillion in spending for the next two years, a raise of about $50 billion above current spending levels.
When you get a $50 billion raise and can dole out cash for pet projects and special interests that raise your political profile and perhaps lead to campaign donations, this sort of thing can be tempting to politicians in both parties. After all, eventually We the People will pay for it all. (In our experience, anytime congressional Democrats send out a press release announcing a "bipartisan" compromise, it means they've won on the issue.)
Many will blame the deficits on the tax cuts. But the fact is that since the tax cuts, the federal government revenues have been going up, but spending has gone up even faster. The Trump administration has made progress in many areas, but not in controlling the growth of government spending.
The administration already projected an annual deficit for this year that should go over $1 trillion. That's just a one-year deficit. It'll be tacked on to the $22 trillion debt.
A brief recap, for those keeping score at home:
• Before 9/11 and the wars, the day George W. Bush took office, the national debt stood at $5.7 trillion. And some folks called that irresponsible government.
• When Barack Obama took office, that had nearly doubled to $10.6 trillion.
• After Barack Obama left office, after Obamacare had come online, the debt stood at almost $20 trillion.
• After two and a half years of a Donald Trump administration, it's gone up another $2 trillion.
Economists will tell you that the amount of debt as a percentage of the Gross Domestic Product is rising, too. If things keep going in this direction, it won't be long until the percentage is as high as during the Second World War.
World War II is a good example of why we don't need a balanced budget amendment in the U.S. Constitution. There are times when it's in a country's best interest to go into debt. But right now the Nazis aren't machine-gunning their way across Europe. Instead, some leaders in this country are talking about Medicare-for-all and free college.
Economists will also tell you that back in the day, most of the debt we owed to ourselves as people bought bonds to safeguard against stock crashes. But these days a large chunk of the national debt is owed to Communist China. As we borrow ever more from other countries, perhaps hostile ones, we take an ever greater economic risk should they ever choose to stop lending us money. And even if they continue to buy our bonds, the interest on that debt amounts to a substantial transfer of income and wealth to countries abroad.
But the greatest danger of a runaway national debt--and the inflation that would follow it--may not be economic. It might be political. Hyperinflation has turned Venezuela into a basket case. At one point during the late crisis in Zimbabwe, prices doubled every 24 hours, and government was too frozen to help. The best example, however, might be from the aforementioned Germany in the 1930s. Which led to catastrophe for not just Germany, but the world.
During the financial panic of 2008, the federal government came to the rescue as the lender of last resort. But what happens if, or rather when, the next panic occurs, and the government of the United States is so deeply in debt that it can't halt, or even stall, the panicky runs?
The numbers speak for themselves. The consequences do not, but are obviously ominous. If neither the Congress nor the president addresses this problem, we will eventually have a crisis. And both major political parties will be to blame.
Editorial on 07/25/2019