The $13 trillion question
Americans are deeply divided over our spiraling national debt, what it means for us, and how we’re ever going to get out of it
DALLAS – Over coffee at the DeSoto, Texas, library, Janice Buckles, an educator and lifelong Democrat, vents at the angry, shouting activists she sees on TV lately – folks who want to chop government down to size, depriving it of funds needed for the elderly, the poor and the schools.
She’s plenty worried about the federal debt, too, $13 trillion and growing – worried it will become a pretext to cut the social safety net.
A half-hour away in Rowlett, in Republican territory, Suzan Fulton is sick of Washington. She’s the office manager at her husband Tom Fulton’s financial advising firm. Last year, after 65 years on the political sidelines, she got worried enough to help start a local tea party group.
Like Buckles, two years her senior, Fulton sees the national debt as a threat to the country’s future. But give Washington more money? It would just get wasted. And higher taxes would only choke off growth.
There’s lots of talk lately in Washington about the hard choices facing the country as the debt hits unprecedented levels. But there’s little mystery about the menu of solutions. Spend less, raise taxes, or find ways to grow the economy.
It’s as simple as losing weight. Exercise more and eat less. Everyone knows how easy that is.
The options to avert the looming fiscal crisis are just as unpopular, and Americans don’t seem ready to embrace any of them. Like dieters who indulge their craving for chocolate cake, they demand costly entitlement programs, a robust military and new highways – but punish leaders who try to cover the costs by raising taxes.
This year alone, the federal government will spend $1.9 trillion more than it collects – a record – on everything from pills for Grandma to new highways, unmanned drones and school lunches.
By 2020, the Congressional Budget Office says, the budget will be $5.67 trillion, with a $1.254 trillion deficit. The government will owe $20.3 trillion, the equivalent of 90 percent of the nation’s economic output. Even if borrowing costs stay at historic lows – a dubious assumption – interest alone will soak up an astonishing $1 trillion.
That’s $1,000,000,000,000 each year, from China, Saudi Arabia or other lenders, or from U.S. taxpayers, before the government can build a flood-control levee, replace an aging spy satellite, feed a hungry child or hire a new Border Patrol agent.
Smaller countries faced with such imbalances run out of options. At risk of social and political upheaval, they resort to sharply higher taxes; fire teachers, police and other civil servants; slash pensions; and scale back public services.
“Whether you want tax cuts or more spending for education, debt is your worst enemy,” said Bruce Reed, executive director of the new White House commission charged with suggesting remedies later this year.
The only bright spot, he added, is that “there are plenty of hard choices to choose from.”
Voters, like many politicians, often blame deficits on relatively minor components of the budget.
Does foreign aid suck up a quarter of the budget? Many Americans think so. It’s actually less than 1 percent.
Social Security and Medicare alone account for a third of federal spending. About one-quarter goes to health care and food for the poor and payments for the unemployed. Defense is next-biggest, followed by interest on the debt itself.
Housing, highways and all the rest add up to only about 20 percent of the budget.
To slow federal spending, Tom Fulton would raise the eligibility age for Social Security to the mid-70s, or even older. Unlike some Republicans, he also would trim defense spending – 18 percent of the budget – though with two wars, he conceded that might take time.
“There’s no sacred cows when you’re going broke,” Fulton said.
But higher taxes? No way. He illustrates why with a parable of two daughters.
The first has always been prudent, but she’s fallen on hard times. Her baby is sick and she needs $500 to cover the rent. “You’re going to give her money,” he said.
The other is “a worthless kid,” a ne’er-do-well who routinely seeks handouts and blows the money on fancy cars and houses.
“You’re finally going to say to hell with it,” Fulton said. “We’re saying to hell with the government, because they want to waste money. Doggone it, it’s frustrating. I love the country and I hate to see it. I hate to see our irresponsibility.”
Last year, 11.1 percent of Americans’ personal income went to taxes – the least since 1950 and well below the peak of 18.6 percent a decade ago.
More than 8 in 10 Americans tell pollsters that cutting the deficit will require sacrifice by the middle class. Just as many, however, object to slowing the growth of Social Security and Medicare benefits, and to hiking taxes on anyone earning less than $250,000.
Then there’s the widely held view that earmarks – spending directed by lawmakers without a full debate or presidential request – are a major source of red ink.
Bridges to nowhere and $500,000 paint jobs for jumbo jets generate headlines and outrage. But earmarks also support cancer research and cutting-edge military equipment. And, contrary to popular belief, they’re carved from whatever Congress planned to spend anyway, so they don’t directly inflate the budget.
Still, critics say that if lawmakers can casually devote $2.6 million to potato research, they probably can’t balance the budget.
In any case, the math is hard to ignore. In this year’s $3.7 trillion budget, earmarks amount to $16.5 billion, little more than a rounding error. No wonder many fiscal experts consider it daunting, if not impossible, to balance the budget solely by holding down spending.