This week, the Department of Treasury announced that the United States had reached the limit of its ability to incur new debt.
That followed an earlier announcement by Treasury Secretary Janet Yellen — specifically designed to place the new Republican majority in the House on the defensive — that the federal government would reach its statutory debt ceiling ($31.4 trillion, 120% of our Gross Domestic Product, or about $90,000 for every man, woman and child in the United States) much earlier than anticipated.
The announcement surprised many who were expecting the debt ceiling to be reached in the third quarter of this year. By accelerating the timetable and heightening the sense of crisis, Team Biden hopes to complicate and retard Republican efforts to exact spending concessions in exchange for raising the debt ceiling.
They probably could have saved themselves the trouble.
The reality is, of course, that runaway federal spending is a bipartisan problem. In the last 50 years (with a couple of notable although momentary exceptions) neither party has shown any sustained interest in spending restraint. The numbers tell the story pretty clearly.
In the last 20 years, across Republican and Democratic administrations and Congresses, federal spending has increased from $2 trillion in 2002 to more than $6 trillion in 2022. Twenty years ago, federal spending was just 18.6% of GDP. In fiscal year 2022, that percentage was 25.6%.
The fundamental problem is that spending taxpayer cash is what members of Congress do.
When you hear a member of Congress talk about “achievements,” they are almost always referencing the passage of legislation that spends money on their personal priorities. For most of them, the principal priority is reelection.
Members of Congress simply take credit for re-routing taxpayer money to favored purposes. Unfortunately, we have become so inured to the garden-variety corruption of buying votes by transferring money from one set of citizens to another, that it scarcely bears notice anymore.
It doesn’t necessarily need to be this way. We can balance the budget. We’ve done it before. Our forefathers ran surpluses while fighting dinosaurs. Just kidding. As recently as 2001, the federal government has run a surplus.
However, given the hole we have dug for ourselves, there are now no quick answers. But there are simple, straightforward and relatively gentle measures: freezing discretionary funding, attenuating benefits or means-testing entitlements, precluding spending some of the money that has been appropriated over the last 24 months (before people can get used to it being there).
Those who forced concessions on House leadership earlier this month have a slightly different but complementary approach: reset the budget back to what it was in fiscal year 2022 and proceed from there.
But before any of that can happen, voters need to demand different results. Budget deficits lead to more debt and ever larger interest payments. Whoever you are obligated to — whether it be nations or individuals — controls you. Your bank. The repossession team that enforces car payments. Or those who hold the debt of the United States.
Moreover, the government is precisely like individuals and families: the larger the debt (and the attendant interest payments) the fewer things that can be done. Right now, interest payments on the federal debt are about $400 billion a year. The federal government could do quite a bit of good with the cash that is going out the door as interest payments.
How does this story end? The same depressing way these stories have ended for two generations — lots of talk, a few modest concessions which will be waived, ignored, or traded away a few years from now, and a vote to increase the debt limit.
Men must change before kingdoms change, and voters must change what they value before their representatives will change their own behavior.
Michael McKenna is the president of MWR Strategies. He was most recently a deputy assistant to the president and deputy director of the Office of Legislative Affairs at the White House.
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