Someday, elderly Americans will reminisce about the days when the federal budget was in surplus, and their grandchildren will laugh in disbelief. "Sure—and you walked 5 miles in the snow to school, uphill both ways," they will reply.
It was not so long ago—2001, to be exact—but the achievement now seems like a relic of an ancient civilization whose strange customs we have long abandoned. We are about as likely to see another balanced budget as we are to see another dodo.
In the past 17 years, the federal government has spent about $15 trillion more than it has taken in. Publicly held federal debt equaled 31 percent of gross domestic product in 2001. Today, it's nearly 79 percent.
The blame is bipartisan. Deficits emerged and grew under George W. Bush. They eventually declined but persisted under Barack Obama. Because of the policies adopted by Donald Trump and the current Congress, budget deficits will only mushroom.
The crucial step in this development was the December enactment of a tax "reform" plan. Its main consequence was to add at least $1 trillion in deficits over the coming decade—on top of the $10 trillion that was already in the pipeline.
Republicans who voted for the proposal insist it will spur so much economic growth that it will pay for itself. Whether they believe that or don't care is open to debate, but the claim has no basis in reality.
A poll of 38 economists by the University of Chicago Booth School of Business found only one who agreed the tax plan will have a substantial positive effect on economic growth. All agreed it will enlarge the debt.
The nonpartisan Committee for a Responsible Federal Budget estimates that in 2028, the debt will amount to 93 percent of GDP. That means the real burden on future taxpayers will be triple what it was in 2001.
Now would be the ideal time to close the fiscal gap. The economy is growing, corporations are profitable, and unemployment is low—factors that boost revenue. If deficits are inevitable and possibly useful during recessions, they serve no good purpose in the ninth year of an expansion. Surpluses would serve a good purpose, by reducing the debt burden and providing room to adapt policy to changing circumstances.
The movement of the baby boom generation from the labor force to the retirement rolls means that outlays are fated to grow, thanks to Social Security and Medicare. Absent significant (and politically dangerous) cuts in benefits, revenues will have to grow just to keep up with obligations.
Instead, Congress and the president are deliberately reducing Washington's income while upping its outlays. It's the equivalent of buying a more expensive house and then quitting your job—a formula for bankruptcy.
We have gotten used to a tide of red ink flowing over the dam. But we don't see that anymore—not because the red ink has stopped flowing but because the dam has disintegrated. The conventions that once served to check budgetary excess are suddenly gone.
When Congress approved and Trump signed a $1.3 trillion omnibus spending measure last week, they agreed that they didn't know what was in the 2,232-page bill. But we don't need to know the actual contents to see that it represents a historic disaster, any more than we need to know how many gallons of water Hurricane Harvey dumped on Texas.
It was a bit incongruous to hear Trump demand that Congress give him a line-item veto. But then, Bush asked for one, and so did Obama. What all three have in common is an unwillingness to seriously attack the deficit. Asking for a line-item veto is a hollow gesture.
Because our leaders have chosen to go on spending without taxing Americans to cover the full costs, revenues will increasingly be used not to pay for actual programs but to service the debt. "Under current law, the federal government will spend more on interest than it does on Medicaid by 2021 and more than it does on defense by 2024," says the CRFB.
Once the tax bill passed, the argument for spending restraint collapsed. Why contain outlays if the federal debt is going to explode regardless? The spending bill merely confirms, loudly, that neither party has any use for fiscal responsibility.
Our leaders realize that eventually, someone will pay a price for this irresponsibility. And they know it won't be them.
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