Why does Washington care more about Russian “collusion” with the Trump campaign than they do the national debt, which just passed $21 trillion on Friday?
The debt issue is not sexy. It does not generate headlines at home or shake the money tree for campaign donations. Besides, if you talk about it, you have to offer solutions. That means advocating spending cuts or tax increases or a combination of both.
This is not popular. It would cost you a lot of votes. It would cut services Americans have come to rely on and hit people where it hurts — their pocketbooks. So it’s so much easier to blame the debt on the opposition and strike a pose for fiscal responsibility.
When you think about mentioning it at all.
The national debt passed $21 trillion this week. It flew by $20 trillion just six months ago. And it will rise another trillion dollars over the next year.
Federal borrowing has been on the rise again since February, when Congress passed legislation to suspend the debt ceiling. That move allowed the government to borrow as much as it needs to fund the activities approved by Congress.
Under the law passed in February, the government will not face any borrowing limit until March 1, 2019. At its current pace, the government is on track to add at least $1 trillion to the national debt by then.
For example, the debt grew by more than half a trillion dollars in the six weeks since the debt ceiling was lifted on Feb. 9.
A large part of the national debt reflects the federal budget deficit, or the amount of spending above the revenues collected by the government. But the debt is rising faster than the amount of the budget deficit, as it also reflects things like federal lending for student loans and mortgage programs.
Reforming entitlements would be nice, but would not address the underlying fact that politicians from both parties simply don’t care. The Big Crunch will probably not happen on their watch so they’re perfectly alright with kicking the can down the road, hoping they can avoid the catastrophe when it happens — as it surely will.
The massive debt means that as the Federal Reserve raises interest rates, servicing that debt begins to skyrocket.
If interest rates merely return to 1990s levels, the resulting costs would raise the 2027 budget deficit from $1.4 trillion to $2.2 trillion. And if the large increase in government borrowing somehow brings back the 10.5 percent interest rates of the 1980s (unlikely, but not impossible), the annual budget deficit would approach a staggering $3.2 trillion a decade from now.
At that point, interest on the debt would cost $2.5 trillion per year, or $17,000 per household — nearly as much as Social Security and Medicare spending combined.
When servicing the debt approaches the $1 trillion mark, will anyone say anything? Or will they still be arguing about whether Trump worked with Moscow to get elected?