The deficit this year will be over $800 billion. Next year it will be close to $1 trillion. For the next decade, it will annually exceed $1 trillion.
The national public debt is over $21 trillion. It is projected to be more than $34 trillion by 2028.
The debt as percentage of the nation’s gross product, which is the best measure of the solvency of a nation, is up from 38 percent in 2008 to 77 percent today and is projected to reach 98 percent in 2028. These are Greece or Argentina-like debt burdens.
The spending of the federal government, which is the primary driver of the deficits, is on autopilot and out of control.
Sixty-nine percent of the federal budget involves mandatory spending or interest on the existing debt.
These mandatory costs, which are primarily entitlement programs aimed at the older generation, are only going to accelerate as the baby boom generation ages, needing greater healthcare and long-term care.
Health care spending in the United States represents one-sixth of our GDP. It is the fastest growing programmatic area of the budget. With the needs of the baby boom generation expanding, it will double in cost by 2028.
Interest on the debt is the fastest growing major part of federal spending. Every one-quarter of one percent of added interest drives $425 billion of interest payment increases over ten years. Thus, if the Federal Reserve raises rates by a full point that, in and of itself, will add $1.7 trillion to the deficit and the national debt.
By 2028, it is expected that one out of every eight dollars of government spending will go to finance our debt.
In light of this harrowing fiscal situation, it would seem to be a bad time to propose the creation of new debt-driving entitlement programs.
Instead, we might hope that President Trump and Congress would focus on wrestling the present entitlements into some kind of manageable shape.
This is not the case.
Significant players on both sides of the aisle are proposing massive new entitlement programs.
Sen. Marco Rubio. (R-Fla.), who sought the presidency in 2016, has called for a new program involving paid family leave for everyone, funded by the government.
Almost the entire Democratic caucus has now endorsed the call from Sen. Bernie Sanders (I-Vt.), a socialist, for “Medicare for All.”
The purveyors of both initiatives have claimed their programs will be paid for. Their “pay-for” proposals have all the purity of an old-time car salesman’s bait and switch.
In the case of Rubio’s family leave for all, he represents as a “pay for” that any family choosing this option will have to reduce their Social Security payments when they retire years later. This does not even begin to pass the smell test.
Rubio’s staff, in coming up with this ruse, appear not to have noticed that Social Security is going bankrupt. It has no funds to offset this program.
And no-one who has ever been around politicians — and who knows their craving to get elected and reelected — could take seriously the idea that the Congress would hold people to this adjustment in their Social Security payment decades after they have received the paid family leave benefit.
This is a proposal that careens toward massive new entitlement expenditures, with no credible offset.
It is great politics: a new entitlement program to help families.
But it would have terrible consequences: the kids of those families would be handed the huge bill that was rung up in the search for their parents’ votes.
Medicaid for All, socialist Sen. Sanders tells us, will be paid for by raising taxes on the rich.
What he fails to mention is that the idea of nationalized medicine — which is what he is proposing, using a euphemism — will in fact not be paid for.
Even a socialist government cannot raise taxes enough to meet the costs of nationalized medicine. Rather, Medicaid for All will drive a massive expansion of federal deficits and debt. That will be its true “pay for.”
It will also lead to a system of rationing as a way to hold down costs. This has occurred in Canada and the United Kingdom, where nationalized medicine is the norm.
It is a terrible idea on the fiscal level and an even worse idea in terms of its effect on the quality of healthcare.
These two proposals, coming from opposites of the aisle, have a great deal of fiscal horror in common.
They guarantee that rather than passing on to our children some semblance of a nation on a strong financial footing, they will get a nation with entitlement programs that cannot be sustained without dramatically reducing their standard of living.
But you must give both ideas credit.
They do have catchy packaging, wrapped in appealing political phraseology. In today’s climate of fiscal irresponsibility, that is enough to push them forward.
In a more sanguine and honest time, they would be ideas whose time has not come.
