The headline in Tuesday’s New York Times caught my attention: “The Debt Matters Again.”
Lopez writes that “For years, many economists believed the country’s debt was not a problem. Interest rates were low, which held down debt payments. Inflation was also low, which suggested debt wasn’t hampering the economy.”
But, as Lopez writes, times have changed.
The New York Times oft-quoted columnist, economist Paul Krugman, who used to opine that the debt didn’t matter that much, is concerned. “Serious deficit reduction, a bad idea a decade ago, is a good idea now,” Krugman wrote.
This is no longer Chicken Little “The sky is falling” hysteria from a few budget hawks. Now, even the New York Times is joining the chorus worrying about the debt, and it’s about time, for several reasons.
First, just paying the interest on the debt is more of a burden all the time. Interest alone cost taxpayers $659 billion in fiscal year 2023. That’s double what it was just three years ago, and it’s projected to continue to rise unless there are policy changes.
The Congressional Budget Office warns of future consequences.
“Such high and rising debt would have significant economic and financial consequences,” the CBO reported last July. “It would, among other things, slow economic growth, drive up interest payments to foreign holders of U.S. debt, elevate the risk of a financial crisis, and increase the likelihood of other adverse effects.”
In Washington, Democrats blame Republicans and Republicans blame Democrats. So what else is new? The Times reports Democrats want higher taxes on the rich and Republicans want to cut spending on social programs, and never the twain shall meet.
Even if they did, we would still be in trouble.
According to the Times, “Even if the preferred policies of each party eventually are enacted, they do not come close to solving the problem. Neither party is willing to cut the biggest government programs: Social Security, Medicare and the military. And both have ruled out tax increases on most households.”
Worse yet, Congress constantly fails to follow the regular order of business and pass annual appropriations bills on time. Another government shutdown is looming later this month if the House and Senate cannot agree on a spending plan.
Members of Congress consistently fail to fulfill that obligation because it is hard and risky. It serves the members well in the short term because there are no political consequences. However, as the non-partisan Committee for a Responsible Federal Budget said, “This is a moment of consequence and continuing to refuse to pay our own bills will not lead us to where we need to be as a nation.”
That is so true, and unfortunately the path we are on now leads toward a weaker nation with future generations saddled with an overwhelming debt passed down to them by their irresponsible ancestors.