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The gross national debt hitting $37 trillion is yet another stunning reminder of the terrible state of federal finances. Spending and revenue are woefully out of balance – to the tune of nearly $2 trillion annually and rising – and instead of addressing this imbalance, Congress keeps choosing to make things worse.
The reality is that we would have hit $37 trillion months ago if the Administration hadn’t employed a series of temporary measures to avoid hitting the debt limit before it could be raised. But instead of using the need to increase the debt limit as an opportunity enact debt-reducing fiscal reforms, Congress and the President just authorized $4 trillion more in borrowing to accompany the $5 trillion debt limit increase.
$37 trillion of debt is a mind-boggling figure that has little precedent. The more economically meaningful figure – debt held by the public as a share of output – is also approaching record levels. Our current debt is 100 percent of the economy – higher than any time other than just after World War II – and is rising rapidly.
To add insult to injury, we’re on course to spend $1 trillion this year just on interest costs. Interest is now the second largest item in the budget, surpassing the entire defense budget as well as Medicare.
Hopefully this milestone is enough to wake up policymakers to the reality that we need to do something, and we need to do it quickly.
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