Given the record levels of spending by Congress over the past year to deal with the adverse economic impacts stemming from the COVID-19 pandemic, some might believe that debt levels don’t matter. Many Americans agreed that Congress was right to deal with the urgency of the immediate situation, while the long-term budgetary impact has been of secondary concern. However, as the pandemic subsides and the economy (and tax revenue) recovers, lawmakers must begin to address the structural budget imbalance that will plague our fiscal house in the years to come if not remedied.
Taxpayers who have been concerned about the unsustainable levels of the national debt know that debt levels in the United States have been steadily increasing for the past decade, long before the pandemic hit our country. Between 2000 and 2008, the national debt doubled from a little over $5 trillion to $10 trillion. The debt then doubled again to $20 trillion in 2017. As of this writing, the national debt stands at $28.3 trillion and is growing by the day. In the second quarter of 2020, the debt-to-GDP ratio had never been higher, equaling 135 percent of the annual economic output of our country. According to data from the Congressional Budget Office, the surge in debt as of June 2020 was the biggest annual growth since Alexander Hamilton founded the nation’s credit in the 1790s, and now it is even higher than the national debt during World War II.
How we got to this point isn’t really a surprise: politicians like to spend money with the belief that doing so boosts the economy, and a strong economy bodes well for an incumbent's reelection prospects. As a result, neither political party is completely blameless when it comes to increasing spending, as it is one of the few things in Washington that transcend political partisanship. Presidents Bush, Obama, Trump, and now Biden have all put trillions of dollars worth of spending on the country's metaphorical credit card. Of course, overspending would not be possible without the help of a willing Congress.
The egregious short-term spending habits also have long-term consequences for future generations. If every American were responsible for paying back an equal portion of the national debt, everyone would have to pay $85,550.198 to the Treasury. That figure doesn’t take into account the thousands of dollars most already pay in income taxes each year.
The effects of this debt crisis are dire; it will lower national savings and income, raise interest payments, lead to massive increases in taxes, decrease our nation’s ability to respond to problems, and increase the risk of a financial crisis. Congress continues to pass massive spending bills with no real way to pay for them. In fact, a group of ten senators signed a letter proposing to add more spending to Biden’s already massive infrastructure proposal, and some House members have called for even more. The national debt is ever increasing, and especially at these historic levels, it's time for Congress to take measures to mitigate it.
Thankfully, National Taxpayers Union Foundation has proposed a few ways for Congress to get our nation's finances back on track. Last year, NTUF released a bipartisan report examining hundreds of billions of dollars worth of wasteful or duplicative spending that would be ripe for cutting from the federal budget. Congress should be finding ways to root out wasteful spending instead of piling on trillions of dollars in new spending that President Biden has proposed. No doubt, the so-called “infrastructure” and “family” plans will hasten the impending fiscal crisis. Taxpayers need budget restraint now more than ever.