Tuesday, March 11, 2014
Last week, I was chatting with a pleasant fellow between innings at a baseball game. The conversation found its way to his job and the rotten economy. He’s a landscaper who has a lot fewer customers today than a couple years ago. His wife works part-time at a convenience store so she can be home when their two kids come back from school. Even with both jobs, the nice fellow says it’s a struggle to afford heating oil, gasoline, groceries, insurance, car payments, and the mortgage.
As the ballgame inched along, our chat turned to Washington. Like many, my bleacher companion is disgusted with the “senseless” spending of the hard-earned tax dollars he and his wife send to Washington.
I mention the $17 trillion national debt resulting from years of borrowing to pay for Washington’s overspending. My fellow fan knows about the debt, but it doesn’t bother him like the reckless overspending. He isn’t sure to whom America owes the $17 trillion, and the number is so staggering large that it doesn’t seem to be real. Besides, he’s not sure how it impacts his family here in Maine, if at all.
I wish that I had had the graph below in my pocket to show this fellow. The red line charts the annual interest payments for the next 10 years that are owed on the $17 trillion mountain of public debt. As a comparison, the billions of dollars in each box is the amount Washington spends today for various programs.
This year’s $224 billion interest payment on the $17 trillion national debt exceeds what we spend on veterans benefits and, separately, on education. In 2018, the projected $517 billion interest payment will roughly equal the current spending on Medicare. In 2021, the $730 billion payment will exceed today’s entire defense budget. In 2023, ten short years from now, the $857 billion interest on the national credit card will surpass the amount we now spend on Social Security.
These interest cost projections from the non-partisan U.S. Congressional Budget Office are based on interest rates rising to historic norms from today’s historic lows. As the economy heats up, if interest rates rise to the levels of the 1980s, the one-year payment in 2023 could reach $2 trillion!
We American taxpayers must pay these accelerating amounts to investors around the world, including other countries, who loaned us this $17 trillion by purchasing our U.S. government bonds. There can be no debt forgiveness, and there is no reset button. If Washington were ever to default on these U.S. government bond interest payments, a financial shock almost too frightening to imagine would ripple through the global economy. And, interest payments on future government borrowing would likely spike as investors demand higher returns for the higher risk of buying U.S. bonds.
The pile of public debt is so monstrously large that the annual interest payments are beginning to crowd out funding for critical federal government programs and services, such as national defense. Increasingly, career politicians in Washington will be forced to choose what government programs to cut in order to pay the interest on the fiscal nightmare they created. To make matters worse, business owners don’t have the confidence to invest in and grow their companies, and to hire more workers. That’s partly why some 25 million Americans still cannot find work or are underemployed.
The smothering $17 trillion national debt negatively impacts all American families. There are fewer jobs because of it. There will likely be smaller Medicare benefits and Social Security checks because of the debt. There will be less improvement to our vital infrastructure such as highways, airports, and rails because of it. There will be less funding for our national parks, public safety, and education because of it.
The United States is a weaker, less secure, and less free country because of the enormous national debt created by Washington’s overspending. It’s high time that our elected officials get serious about addressing the fiscal mess they created.
Bruce Poliquin is the former Maine State Treasurer and a 2012 Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a proud third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the State about the important issues facing Maine families and their jobs.