But Washington keeps hitting the snooze button.
In October 2008, the US national debt surpassed the $10 trillion mark for the first time.
By mid-September 2017, the national debt had doubled to $20 trillion. This was so new it probably feels like the week before. Remember Donald Trump issuing a nuclear war threat against North Korea from a country club in New Jersey? Have you seen Thor: Ragnarok in the cinema? That was in autumn 2017. That was less than five years ago.
Data released by the US Treasury Department yesterday confirmed that the national debt has hit a new milestone: $30 trillion.
The speed with which the federal government has amassed the third mountain of 10 trillion I-O-U bills is truly remarkable. Yes, the response to the COVID-19 pandemic has propelled government borrowing and spending to stratospheric heights, but even before COVID loomed on the horizon, the operational question regarding national debt was whether the country would reach $30 trillion. The drivers of the debt are an unbalanced entitlement system and a persistent gap between government spending and tax revenues, the result of more than two decades of bad decisions in Washington, where politicians of both parties have lazily borrowed to pay for everything from foreign wars. up to $1,200 checks for most Americans (even those making six figures) during the pandemic.
Even if the rising debt doesn't trigger a default or another crisis, it will have a significant impact on Americans' future. Higher debt correlates with lower future economic growth, in large part because the amount of money that has to be taken out of the economy to pay interest on debt will continue to rise. Every dollar used to pay down debt is a dollar that cannot be used to invest in new technology, pay workers, or save for the next rainy day.
Higher debt is also making it harder for policymakers to fight inflation, which is eating away at Americans' paychecks and savings faster than at any time in the past 40 years.
The $30 trillion in debt is "a staggering figure that gives cause for concern," Maya MacGuineas, chair of the Committee on Federal Budget Responsibility (CRFB), a bipartisan group, told Wall Street that advocates a balanced budget household uses. Newspaper. "It's the result of borrowing for really big crises, notably the Covid pandemic, but also trillions and trillions of loans for no other reason than politicians are no longer willing to foot the bills."
But apart from the MacGuineas and his small group of allies, there is little recognition in Washington that debt is a problem. That's another problem. When the national debt surpassed $10 trillion in 2008, it became a major talking point in that year's presidential campaign. "That's $30,000 for every man, woman and child," said future President Barack Obama during a campaign rally in Nebraska that year. "It's irresponsible. It's unpatriotic."
Later, after federal spending skyrocketed during the Great Recession, the Tea Party movement emerged to demand fiscal responsibility from Obama and Congress. The results were mixed: Sequestration and temporary budget caps slowed, if not reversed, runaway spending until Republican-controlled Congress under President Donald Trump abandoned efforts and increased spending.
The United States borrowed an average of $7 billion a day last year, according to the CRFB, but the current brand of supposedly conservative populism is fueled by culture war conflicts, not a concern to dismantle the United States' fiscal underpinnings.
And while neither side is serious about curbing debt, both are responsible for a pandemic-era spending spree funded entirely by the nation's credit card. While some of the $5.3 trillion in emergency spending from a pandemic was a reasonable response to a once-a-generation crisis, much of it was wasted.
The debt will not stop rising once the pandemic is over. Entitlements like Social Security and Medicare are in dire straits, getting even more expensive as the average American ages. Even without another unexpected crisis, deficits will top $1 trillion a year, meaning debt will continue to grow both in real terms and as a percentage of the economy. The Congressional Budget Office estimates that the federal government will increase the debt by an additional $12.2 trillion through 2031.
Which means it won't be long before we look back this week and say it was like yesterday that debt hit the $30 trillion mark.