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It’s tough to decide what the most appalling part is of today’s announcement from the Treasury: that we surpassed an unprecedented $38 trillion in gross national debt; that we’ll likely hit the next milestone in just a matter of months; or that we are getting this news amid a government shutdown with seemingly no end in sight.
While nominal gross federal debt may not be the most meaningful measure of our fiscal health, the rest of our fiscal situation is just as bleak. Debt held by the public – economists’ preferred measure of debt – is already as large as our entire economy, beyond any point outside of a world war. The deficit last fiscal year, which ended just a few weeks ago, was $1.8 trillion and is headed towards $2 trillion annually over the coming decade. And we’re on course to spend $1 trillion just on interest payments on the national debt this year, exceeding our spending on our national defense. Something has to give – and eventually it will, whether we are prepared for it or not.
The reality is that we’re becoming distressingly numb to our own dysfunction. We fail to pass budgets, we blow past deadlines, we ignore fiscal safeguards, and we haggle over fractions of a budget while leaving the largest drivers untouched. Social Security and Medicare, for example, are just seven years from having their trust funds depleted – and you don’t hear anything from our political leaders on how to avoid such a disaster.
Policymakers have a choice: they can continue to abdicate the most basic responsibilities of budgeting, or they can finally confront the worsening fiscal situation before it’s too late.
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