If you have ever worked in a large company and had to make and stick with a budget, you know what happens if you don’t. If you have ever tried to set and live on a personal budget and didn’t, you know the consequences.
The federal government is a different animal of course, it can spend what it wants, print money and raise taxes and make a lot of people feel good in the process. Heck there was near panic when federal departments were asked to cut spending by 5% … 5% mind you. Many economists on the left see nothing wrong with all this. Their argument is that as the economy grows government revenue will increase and the debt decline. Okay, I guess that makes sense.
The current total debt stands at $17,549,497,313,923.60 as of March 19. Of that seventeen trillion dollars, $4,966,992,678,888.08 is the debt the treasury owes to government trust funds such as Social Security, a debt we all want to be sure is paid when due. That means $12,582,504,635,035.52 is owed to the public and other countries. Russia holds $132 billion of U.S. Treasury securities for example. The economy must do a lot of growing to reduce this debt.
But wait, the President’s new budget calls for spending that adds $564 billion to the debt so before the economy can start dealing with the accumulated debt, it must grow to offset this new addition to the debt.
I think we can all agree that deficits are necessary in times of national emergency like war or even an economic crisis, but when that crisis passes shouldn’t budgets work to lower the debt, not continue to add to it? There will always be new things, desirable things to spend money on, but that doesn’t give us (current generation) a blank check to do so.
Perhaps we should keep in mind it’s only a few years before the Social Security Trust will start redeeming its bonds and less time before interest rates and debt service rise. What happens when additional revenue is needed for these things regardless of future budgets? Politicians need to think longer term.