Contemplating federal spending, debt and deficits these days is like trying to imagine outer space. Just as we are not equipped to imagine infinity, we also have trouble putting our heads around a trillion dollars.
For the record, a trillion is one million times one million, or one-thousand billion. It takes 12 zeros to write a trillion, if any of that helps.
We now must consider this number because of the pandemic. Congress has already allocated about $2.7 trillion just in the last few weeks to help offset the economic impacts of the shutdown.
Even Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB) supports the spending. “Combating this public health crisis and preventing the economy from falling into a depression will require a tremendous amount of resources, and if ever there were a time to borrow those resources from the future, it is now,” said MacGuineas.
However, the numbers do add up… quickly.
The deficit just for April alone was $1.4 trillion, substantially higher than the deficit for all of 2019 (just under $1 trillion), which was the highest in seven years. CRFB estimates that for this year and next, deficits will total $6 trillion, pushing the total debt close to $30 trillion.
Here is another shocking statistic: The Congressional Budget Office projects that the federal debt will be equal to the total amount of all the goods and services produced in the country (Gross Domestic Product) by the end of the fiscal year.
But wait, there could be more coming.
House Democrats Tuesday proposed the Heroes Act. What would be the fifth coronavirus stimulus bill has a price tag of $3 trillion. The bill includes money for state and local governments, another round of direct cash payments to individuals, hazard pay for essential workers, an extension of the $600-a-week unemployment benefit and money for rent, mortgage, and utility assistance.
The national debt is out of control,” wrote Robert J. Samuelson in the Washington Post recently. “This raises many dangers, including a run against the dollar.”
Investors, including foreign countries like China and Japan, buy American debt because it is a good investment based on the strength of the U.S. economy and the safety of U.S. Treasury securities.
But, as Samuelson wrote, “There is no law of nature prohibiting massive selling of dollars, which would trigger instability of interest rates, exchange rates, commodities, stocks and bonds.”
Congress acted swiftly and in a bi-partisan manner to help sustain the country’s economy during the pandemic. Once the danger of the virus has diminished, Congress should demonstrate the same sense of urgency to at least begin to get federal spending under control.