Friday, July 12, 2019

The national debt is one big problem nobody’s doing anything about

The national debt currently is more than $22,000,000,000,000 – that’s 22 trillion dollars – and growing by the minute. No one in Washington seems very concerned about it. What’s worse is that this situation has existed for decades.

Data from the Office of Management and Budget shows that of the ten presidents who were in office when the debt grew the most, all but two were 1970 and after. In case you can’t call them to mind, they are, in order: Richard Nixon, Gerald Ford, Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, Barack Obama, and Donald Trump.

The four who ran the highest deficits, as reported by Kimberly Amadeo, writing in The Balance, are, from worst to least bad:
* Barack Obama, leading the pack with $6.785 trillion. 
* President George W. Bush is next, racking up $3.293 trillion.
* President Ronald Reagan added $1.412 trillion.
* President George H.W. Bush created a $1.03 trillion deficit in one term. 

However, Amedeo explains, blaming the president is too easy because other factors play a role. She listed the following:
1. The president has no control over the mandatory budget or its deficit. That includes Social Security and Medicare benefits. These are the two biggest expenses any president has. 
2. The Constitution gave Congress, not the president, the power to control spending. The president’s budget is just a starting point. Each house of Congress prepares a discretionary spending budget. They combine them into the final budget that the president reviews and signs. 
3. Each president inherits many of his predecessors' policies. For example, every president suffered from lower revenue.
4. Some presidents have to deal with catastrophic events. President Obama responded to the worst recession since the Great Depression. President Bush reacted to the 9/11 terrorist attacks and Hurricane Katrina. Their required responses came with economic price tags.

The point here is that every year since Nixon was elected president, except for four, there has been a budget deficit, and that is a serious problem that is not being addressed. The national debt is more than six times the annual federal revenues of recent years.

Justin Bogie, Senior Policy Analyst in Fiscal Affairs at The Heritage Foundation, addressed this problem in an article last month. “Despite the strong economy, the nation remains in a precarious and unsustainable budget position, just as it was last year,” he wrote. “Debt held by the public is set to rise to nearly one and a half times the size of the economy in the coming decades.”

Some want to blame the Trump tax cuts for causing the problem, or if not causing it, making it worse. Actually, despite the tax cuts, or as a result of the tax cuts, federal revenues have risen since 2017. 

The Congressional Budget Office shows that for 2017, before the tax cuts took effect, federal revenue totaled $3.316 trillion. After the tax cuts took effect revenue rose by $14 billion to $3.330 trillion in 2018, and the CBO projects revenue of nearly $200 billion more than 2017 at $3.511 trillion for 2019.

Federal tax collections were the highest in history in 2018 and 2019. So, the problem is not a revenue problem, because with sensible policies revenue can increase even beyond 2018 and 2019 levels. 

What we have is a problem of spending, further complicated by some slight of hand by Congress.

“Congress utilizes a wide variety of gimmicks and accounting tricks to hide the true costs of legislation,” Bogie writes in another Heritage article. “This allows Congress to spend more and more — evading fiscal discipline and adding billions of additional dollars to the federal debt each year.”

Such tricks include: Timing Shifts - shifting in what year revenues or expenses may be reported; using Disaster and Emergency Spending to circumvent budget caps; double counting Federal Trust Fund savings; not accounting for interest costs in Legislative Cost Estimates, and other such deceptions.

Obviously, closing these loopholes should be a first step in restoring fiscal sanity to the budget process. But closing and/or consolidating government agencies to remove duplication of services; eliminating wasteful policies and programs, as well as ending overreaching and underperforming government programs; and general belt-tightening, not unlike businesses utilize, to stay in business can make a substantial difference.

These are common sense steps. But they go by the wayside in our gargantuan government that is infected by self-interest and political motivations, things elected officials and bureaucrats often put ahead of what’s best for the country and the citizens whose taxes pay their salaries, and fund this malfeasance.

The Government Accountability Office’s “Annual Report” lists steps to reduce costs, reduce fragmentation, overlap, and duplication within federal agencies and programs. When followed, they produced positive change in the past.

And, The Heritage Foundation has produced a report titled “Blueprint for Balance,” that “presents a holistic vision for how to rein in out-of-control government spending, create a more accountable and effective budget process, and balance the budget in 10 years.”

The Heritage blueprint outlines how government can cut $10.8 trillion over 10 years, extend the tax cuts, and eliminate deficits by 2029. 

It’s time to focus on this problem.

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