By Steve Brawner

© 2019 by Steve Brawner Communications, Inc.

June 27, 2019

Those of us who preach against the national debt often warn of a coming economic calamity, which obviously is falling on deaf ears. Politicians aren’t inclined to address future problems occurring after the next election, and voters don’t punish them for it.

So let’s try a new approach: There’s a cost to the national debt, and you and I pay part of it.

That reality was reflected in a report released this week by the Congressional Budget Office, “The 2019 Long-Term Budget Outlook.”

Let’s cover some basic facts first.

The debt is now more than $22 trillion, or about $67,000 for every American. It’s more than doubled since 2008, and it’s quadrupled since 2000.

It’s measured in two ways. The overall debt includes money the government has borrowed from itself – for example, by raiding the Social Security Trust Fund. That shell game, otherwise known as “intragovernmental holdings,” is responsible for almost $6 trillion of the debt.

The rest, more than $16 trillion, is known as “debt held by the public,” and it’s what the government owes others. About $6.4 trillion is owed to non-Americans. We owe China more than $1 trillion.

The CBO relies on that smaller $16 trillion number when it makes its projections, but even that number is huge. By the end of this year, it will be 78 percent of the gross domestic product, the most since the years shortly after World War II. If you look at that debt-to-GDP ratio historically, it was about 30 percent at the nation’s founding, briefly fell to zero in the mid-1830s, spiked during the Civil War and World War I and fell afterwards both times, and then skyrocketed during the Great Depression and World War II. Then it fell again, rose, and then dipped during the 1990s.

It’s been climbing since 2000. It has more than doubled as a share of the gross domestic product since 2007. At 78 percent, the debt-to-GDP ratio is far higher than the historical average of 42 percent over the last 50 years.

And unlike every other period in American history, there’s no dip in sight. The debt just keeps rising for as long as can be projected. Under CBO’s main scenario, by 2049, the debt will be 144 percent of gross domestic product, the highest ever.

The primary driver of the projected increase is the government has made long-term commitments to popular, large programs like Social Security, Medicare and Medicaid without fully funding them. In fact, Congress and the president have cut taxes, most recently at the end of 2017.

We can debate how best and most morally to address this situation. What’s not debatable is the math does not add up.

So now let’s get to the part about your money. The CBO has previously estimated that Uncle Sam will spend $389 billion in interest payments this year. That’s about $1,200 for every American. Those are your tax dollars, and remember, part of that goes to foreign lenders like China’s government. The federal government spends more on interest than it does a lot of important things. In 2023, it could spend more on interest than the military.

Meanwhile, the national debt drains the economy because the government’s borrowing reduces the money available to loan elsewhere. When Uncle Sam vacuums up available capital, less is invested in factories, technology, research and other more productive uses.

If the government’s debt levels could steadily be reduced to that 42 percent average, by 2049, the gross domestic product would be $4,200 per capita higher than it would be if debt reaches 144 percent of GDP. That’s in 2019 dollars. There’s a plausible alternative scenario where the debt equals 219 percent of GDP. There’s about a $9,000 difference in that case.

Let’s be clear: That $4,200 is a projected per person average, not a guaranteed check for anyone, including you. Moreover, we all benefit (today) from the national debt because it boosts the economy artificially, and because we get services we don’t pay for – by stealing from our grandchildren.

The inherent immorality of that isn’t enough to make us stop, or vote for someone else. So lets remember: The national debt isn’t just free money for us either. It costs us now. It will cost us in the future.

Does that help?

Steve Brawner is a syndicated columnist in Arkansas. Email him at brawnersteve@mac.com. Follow him on Twitter at @stevebrawner.