Common sense teaches us to not spend money that we don’t have. As college students, we understand the consequences of our student loans and inevitable repayment plans. We try to be smart with our money, at least most of the time. Unfortunately, the federal government seemingly continues to fail to comprehend the consequences of spending money it doesn’t have.
This week, the national debt reached the almost unfathomable level of $20 trillion, the highest amount of debt we have ever seen. The national debt, if we stay on this course, will continue to rise as the federal budget remains severely out of balance. Our most recent federal budget pegs spending at a total of $4.094 trillion with revenues of only $3.654 trillion this year. This unrestrained spending is so irresponsible that it is a threat to the ability of our generation to grow our economy, fund necessary social programs and provide for necessary defense. Our very way of life is being threatened by this desire to spend borrowed money and not make difficult decisions.
The increase in our national debt has accelerated at a tremendous pace in recent years. During the Obama administration, the federal debt more than doubled, rising 116 percent by the end of his eight years. A substantial portion of this money was used to finance expensive (though some would argue necessary) entitlement programs like Obamacare and increases in welfare spending. There was also less federal tax revenue raised during this period. Less revenue and increased spending spelled disaster for our national debt.
A huge portion of our federal budget pays for mandated benefits, such as Social Security, Medicare and Medicaid. This “mandatory spending” is difficult to reduce. The only mechanism to decrease spending on these entitlement programs is for Congress to amend the law that authorized the initial spending. This entails an incredibly difficult process, which includes achieving 60 votes in the Senate, a nearly impossible task given the current gridlock. The potential political backlash of voting to reduce these programs also reduces the likelihood of passage.
Discretionary spending accounts for about 40 percent of the budget. This portion of the budget funds all programs for the Defense, Housing and Urban Development, Education, Energy, Transportation, Interior, Homeland Security, Veterans and Health and Human Services departments and agencies. These critically important functions cannot withstand significant budget reductions.
While we have all this to pay for, the ever-increasing debt burden is consuming a larger portion of our finite tax dollars. According to the Congressional Budget Office, by 2027, net interest payments on the national debt will consume $768 billion tax dollars. This is money which otherwise could be allocated towards social programs, defense, infrastructure investments or other critically important programs.
Some level of federal debt is both inevitable and, if well managed, not destructive. The carrying cost of modest borrowings to fund critical programs such as education is worth the investment. However, our current level of federal debt is stifling and alarming. Our millennial generation will spend our adult lives working to repay the tab recent administrations have run up. The consequences of defaulting on our debt are difficult to imagine.
We cannot count on the possibility of an increase in federal tax receipts through employment and income growth to alone pull us out of this downward spiral. When you find yourself in a hole, the first thing to do is to stop digging. Though it will not be politically popular, Congress must evaluate responsible spending, most likely reducing social transfer payments. If they don’t Congress is placing these important programs at risk of total collapse. For example, as retiring baby boomers look for their social security checks to help fund their well-deserved retirement, all they may find is disappointment. The Social Security Trust Fund estimates that by 2036, Social Security revenue will cover only 77 percent of the benefits promised to retirees.
A wakeup call has been sounded as hit the $20 trillion debt milestone. It is time for Congress to make the difficult decisions, which they were sent to Washington to make. Continuing to kick the can down the road will have disastrous consequences for our generation.
