Let’s start this column with two words that sound like they might mean the same thing, but don’t.
“Deficit” and “debt” both refer to when the government spends money it does not have. The big difference is that “deficit” refers to a yearly shortfall, whereas “debt” refers to the government’s accumulated shortfalls. “Deficit” is the money the government added to its credit cards just this year. “Debt” is the money that was already there, plus the new deficit. Add it all together, and the national debt now equals $18.96 trillion, or $58,700 for every American man, woman and child.
Another difference is that sometimes the deficit goes down, but the debt almost never does. In fact, the last time the United States government owed less than it did the year before was 1957 under President Eisenhower.
The one-year credit card additions, on the other hand, have been mostly shrinking since 2009, when the red ink hit $1.4 trillion, or more than $4,600 for every American. That was the year the economy was tanking, the banks were being bailed out, and the United States was still very much involved in Iraq and Afghanistan. Fiscal year 2009 started Oct. 1, 2008, when President George W. Bush was still in office. Under President Obama, yearly deficits stayed above $1 trillion each year until 2013, when the deficit dipped to $680 billion. In 2015, it was $439 billion.
As Obama pointed out in his State of the Union address, deficits have been cut by almost three-fourths since their peak. But with that $439 billon deficit, the government in 2015 still added about $1,400 in debt for every American.
Here’s another way to look at those numbers. As illustrated on the Department of the Treasury’s website, www.treasurydirect.gov, the $1.4 trillion in 2009 was equal to all the debt accumulated over the years from 1790 until 1983 – almost two centuries of combined borrowing. The $439 billion the president bragged about was equal to all the debt accumulated from 1790 until 1972.
That’s better. But no, the state of the union is not strong in this area.
Have I depressed you yet? Here’s the kicker. This brief period of falling deficits is now ending, and the yearly red ink will start rising faster again. On January 19, the Congressional Budget Office projected that the 2016 deficit will increase to $544 billion. From there, yearly deficits will keep expanding so that by 2026, a decade from now, we’ll be back to $1.4 trillion, and that’s assuming Congress doesn’t do anything to make the situation worse, that the United States isn’t in the middle of another recession or war, or that interest rates don’t spike. At that point, the deficit will be 4.9 percent of the nation’s gross domestic product, double what it is today.
This is occurring for several reasons. In December, Congress increased spending for defense and other areas while making permanent numerous tax breaks that were “temporary” but routinely extended every year. Meanwhile, the debt is being driven over the long term by Social Security, government health care programs such as Medicare and Medicaid, and interest payments for the money already owed.
People don’t like to read sentences like that last one. Aside from interest payments, those programs are generally very popular because they are seen as benefitting the needy and/or deserving.
But I’m just telling you where the money goes. The government is increasing spending by $2.7 trillion from 2015 to 2026. Ninety percent of that increase is in those areas.
So that’s where we are: The debt is still increasing, and now, so are the deficits. For the foreseeable future, the government will keep going deeper in debt, and it will do so faster and faster.
There are two types of debt that don’t show up on a balance sheet. One is the debt we owe to our ancestors, who sacrificed much and sometimes everything to build a better life for us. We owe it to them to do the same for our children.
The other debt is to those children. We owe them better than this.
Related columns: Tax-cut-and-spend Congress.