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March 2015 Brief: Volume 22, Number 9

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The National Debt Must Be Addressed

 

by John Hendrickson

 

 

Congress is faced with the task of addressing a number of significant domestic and foreign policy issues. There will most certainly be divisions between Republicans and Democrats over such issues as President Barack Obama’s unconstitutional executive order granting amnesty in regard to illegal immigration and the continuing debate over economic policy. One issue that Congress cannot ignore is the federal budget and the national debt. The national debt is currently over $18 trillion and rising, and this represents a serious problem for the future of our nation. The out-of-control spending problem is a bipartisan problem, and it will take political will and courage to begin the process of cutting.

 

Stephen Moore, who serves as the Chief Economist for The Heritage Foundation, wrote that when he “first arrived in Washington in the early 1980s, the debt was roughly $2 trillion.”[1] As Moore explains, “five Presidents later, the debt for the first time exceeded $18 trillion.”[2] The escalating debt is a serious problem that is hindering the economy and national security.

 

The Heritage Foundation in December released Federal Spending by the Numbers, 2014: Government Spending Trends in Graphics, Tables, and Key Points, which explains in detail the seriousness of the fiscal crisis confronting the nation:[3]

 

The national debt will still reach nearly $18 trillion this year and it already exceeds 100 percent of gross domestic product (GDP). Publicly held debt (that is, debt borrowed in credit markets, excluding Social Security’s trust fund), is alarmingly high at three-quarters of GDP. Without further spending reforms, rising debt threatens to impede growth, harm Americans’ economic opportunities, and even threaten the nation’s security.[4]

 

The federal budget is currently at $4 trillion, and although deficits have recently been smaller, spending continues to accelerate whether it is on entitlement programs or general government spending.[5] The unfunded obligations of entitlement programs such as Social Security, Medicare, and Medicaid play a major part in driving the debt crisis. These entitlements will cost trillions if not reformed:

 

Three major budget categories — major health care programs, Social Security, and interest on the debt — will account for 85 percent of nominal spending growth over the next decade.[6]

 

The Patient Protection and Affordable Care Act (Obamacare) “is the largest driver of increasing federal health-care spending, and it alone will add $1.8 trillion in federal spending by 2024.”[7] This is in addition to the major tax increases that result from the Affordable Care Act. Spending on entitlement programs is already consuming a majority of the federal budget. “Forty-nine percent, or almost half of all spending, paid for Social Security and health-care entitlements (primarily Medicare and Medicaid).”[8]

 

The issue of the national debt and government spending seems to be ignored, and President Barack Obama even declared the era of “austerity” over, but failure to resolve the debt crisis will be detrimental. As Stephen Moore explains:

 

Sure, we have a near $18 trillion economy, but the problem is that the debt is outgrowing the economy. In just the last seven years — the last year of George W. Bush’s presidency and the first six of Obama’s — the debt has increased by roughly $7.4 trillion. That’s ten times the entire debt incurred in our first 200 years as a nation.[9]

 

President Obama has recently released his $4 trillion budget request to Congress, and he is attempting to argue that the era of austerity is over. “There has been no austerity, mindless or otherwise, during the Obama presidency (or, for that matter, the Bush presidency before that),” argued Michael Tanner, a Senior Fellow with the Cato Institute.[10] President Obama is describing his budget blueprint as middle-class economics, but his recent policies created not only a slow economy, but one of the worst economic “recoveries” on record.

 

Senator Jeff Sessions (R-AL) stated that “one of the economic challenges we face now is the combination of high joblessness, low wages, and a shrinking middle class.”[11] The solution to solve the fiscal crisis rests in cutting government spending, lowering tax rates, and eliminating unnecessary regulations. The high levels of government spending demonstrated by escalating entitlement costs and the national debt cannot be ignored.

 

Endnotes:

[1] Stephen Moore, “The United States of Debt,” National Review Online, December 9, 2014, <http://www.nationalreview.com/article/394293/united-states-debt-stephen-moore> accessed on December 10, 2014.
[2] Ibid.
[3] Romina Boccia, “Federal Spending by the Numbers, 2014: Government Spending Trends in Graphics, Tables, and Key Points Including 51 Examples of Government Waste,” Special Report, No. 162, The Heritage Foundation, Washington, D.C., December 8, 2014, <http://thf_media.s3.amazonaws.com/2014/pdf/SR162.pdf> accessed on December 10, 2014.
[4] Ibid., p. 1.
[5] Ibid.
[6] Ibid., p. 2.
[7] Ibid., p. 1.
[8] Ibid., p. 3.
[9] Moore.
[10] Michael D. Tanner, “Obama’s ‘Mindless Austerity’,” Cato Institute, February 4, 2015, <http://www.cato.org/publications/commentary/obamas-mindless-austerity#zW0lAB:6GR> accessed on February 16, 2015.
[11] Senator Jeff Sessions, “Keynote Address at the Calvin Coolidge Presidential Foundation’s National Budget Conference,” United States Senate Committee on the Budget, Republicans, November 12, 2014,
<http://www.budget.senate.gov/republican/public/index.cfm/press-releases?ID=352c9ef9-4f71-46a8-853d-f10b57606832> accessed on December 10, 2014.

 

John Hendrickson is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact him at Public.Interest.Institute@LimitedGovernment.org.

 

Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.

   

 

 

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