In October 2008, the US national debt crossed the $10 trillion mark for the first time in history.
By mid-September 2017, the national debt had doubled to $20 trillion. This was so new that it probably feels like the week before. Remember Donald Trump threatening nuclear war against North Korea from a country club in New Jersey? Have you seen Thor: Ragnarok in the cinema? That was in the fall of 2017. It was less than five years ago.
Data released yesterday by the US Treasury Department confirmed that the national debt reached a new milestone: $30 trillion.
The speed with which the federal government amassed the third mountain of 10 trillion I-O-U bills is truly remarkable. Yes, the response to the COVID-19 pandemic has pushed government borrowing and spending to stratospheric heights, but even before COVID loomed on the horizon, the key question regarding the national debt was, when not, if the country could reach $30 billion would achieve. The drivers of the debt are an unbalanced entitlement system and a persistent gap between public spending and tax revenues, the result of more than two decades of poor decisions in Washington, where politicians of both parties have casually borrowed up to $1,200 to pay everything from foreign wars - Paychecks for most Americans (even those earning six figures) during the pandemic.
Even if mounting debt doesn't trigger a default or some other crisis, it will have a significant impact on the future of Americans. Last but not least, higher debt correlates with lower future economic growth, as the amount of money that needs to be withdrawn from the economy to pay interest on debt is increasing. 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.
Rising debt also makes it harder for lawmakers to fight inflation, which is eating into Americans' paychecks and savings faster than at any time in the past 40 years.
The $30 trillion debt is "a staggering number that is really cause for concern," Maya MacGuineas, chairwoman of the Federal Budget Responsibility Committee (BFRB), a bipartisan group that advocates for fiscal balance, told the Wall report. Street Diary. "It's the result of both really big crises lending, particularly the covid pandemic, and trillions and trillions of trillions of borrowing for no reason other than that politicians are no longer willing to pay the bills."
But aside from MacGuineas and her small group of allies, there is little recognition in Washington that debt is a problem. That is 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," future President Barack Obama said during a campaign rally in Nebraska that year. "It's irresponsible. It's unpatriotic."
Later, after federal spending soared during the Great Recession, the Tea Party movement arose to demand fiscal responsibility from Obama and Congress. The results were mixed: Sequestration and temporary budget caps slowed, if not reversed, runaway spending, until the Republican-controlled Congress under President Donald Trump abandoned the effort and increased spending.
According to the CRFB, the United States borrowed an average of $7 billion a day last year, but the current brand of supposedly conservative populism is fueled by culture war conflicts, not concerns about the crumbling of America's financial fundamentals. .
And while neither side is serious about reducing debt, both are responsible for a pandemic-era spending spree financed 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 generation-long crisis, much of it was wasted. States have received hundreds of billions in budget support and now have huge surpluses in many cases. Direct checks intended to unite employees whose workplaces were closed due to COVID also targeted people earning six figures working from home. It is estimated that every dollar borrowed and spent under last year's $1.9 trillion relief bill generated just $0.73 in economic activity.
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.