Opinion | Biden’s Budget Won’t Solve Big U.S. Debt Problem

The deliberate ignorance of reality by policy makers has ballooned the national debt to over $31 trillion. The country has reached a perilous time, with debt as a percentage of the overall economy at its highest level since World War II. If nothing changes, the United States will soon undermine its national security, jeopardize its ability to invest in the future, unduly burden future generations, and cut vital programs like Social Security and Medicare. The future is not for everyone.

Debt stabilization should be top priority for Biden and Congress. It starts with setting clear goals. A reasonable goal is to keep debt below the size of the economy (100% debt-to-gross domestic product ratio). Debt now stands at 98% of his economy’s size, and he’s expected to reach 118% in 10 years, according to the nonpartisan Congressional Budget Office. You don’t need a PhD in accounting to see the warning signs here. When debt outweighs the economy, interest costs become so heavy that there is little money left for other purposes. By 2033, nations will spend more on paying creditors than their entire defense budget.

Note that the editorial board does not advocate a balanced budget. It may sound ideal, but it is unrealistic. Lawmakers must either raise taxes or cut spending by $16 trillion to balance the budget over the next decade. The Committee on a Responsible Federal Budget says even the more modest goal of stabilizing debt to match the size of the economy would require nearly $8 trillion in savings. Biden proposed net savings of about $3 trillion over the next decade. This was largely achieved through higher taxes on the wealthy and proposals for governments to pay less for prescription drugs purchased through programs such as Medicare and Medicaid. While he deserves credit for delivering some cuts and revenue increases, his plans say heroic political efforts will be needed to get anywhere near what is needed over the next decade. Emphasizing reality.

What most lawmakers are reluctant to admit is that Democrats and Republicans share responsibility for most of the debt. Biden has blamed former President Donald Trump for racking up debt with massive tax cuts that weren’t paid. That rules out the inconvenient fact that he, too, has significantly increased the debt with additional pandemic aid approved only by Democrats.Meanwhile, Mr. Biden has won three Pinocchios from the Post’s fact-checking team. Since then, it has boasted of reducing the budget deficit by $1.7 trillion. End of aid.

See how the national debt ballooned to $31 trillion

The scale of sobriety needed now means that much more needs to be done than lawmakers admit. Democrats suggest that we need higher taxes on big business and the wealthy, and a little less defense to get us where we need to be. It is similarly misleading when

But here’s the good news. There are ways to stabilize your debt without making big sacrifices. Moderate-income Americans can and should be significantly insulated from giving more. , requires politicians to move away from their favorite issues.

There is an urgency to address this. As CBO director Phillip Swagel said last month, “The longer you wait, the harder it gets.” The increase in annual interest costs, which he said will tend to triple over the next decade, will make it harder for other programs to invest. It reduces funding and discourages investment in other parts of the economy.

The CBO predicts that Medicare will have to drastically cut benefits by 2030 and Social Security by 2033. Another calculation will come even sooner, at the end of 2025, when Trump’s personal tax cut expires. Republicans made the corporate tax cut permanent, but not the family tax cut. If the tax cuts are prolonged, the country’s finances will deteriorate. As Federal Reserve Chairman Alan Greenspan said in 2005 during the debate over extending George W. Bush’s tax cuts: We should be equal with the American people about the financial precarious situation they are in.” That statement is even truer now.

Some argue that this is fear-mongering. For decades, borrowing costs have skyrocketed, warning investors to shy away from U.S. Treasuries when they get too expensive. A decade ago, this editorial page called the 70% debt-to-GDP ratio he called an “embarrassing level,” but the country was able to exceed it without triggering a crisis. . The economy continues to thrive, and domestic and foreign investors are still buying US Treasuries. But the danger point turns out to be farther than many originally thought, but it’s getting closer. Japan, with her 200% debt-to-GDP ratio, has had years of slow growth. Greece and Italy also had crisis and near-crisis situations. Another big difference from 10 to 20 years ago is that baby boomers are on the verge of retirement and government costs are rising rapidly.

Debt stabilization may not be a catchy campaign slogan, but the concept is easy to understand. It means putting the nation on a sustainable path to ensure there is funding to provide everything from education to defense to social security, not to mention the next security or economic disaster. increase. Mr. Biden, Senate Majority Leader Charles E. Schumer (DN.Y.) and Senate Minority Leader Mitch McConnell (R-K.) have been in office for decades. They played a big role in creating this mess. House Speaker Kevin McCarthy (Republican, CA) has been in the House since his 2007 and shares that responsibility as well. Now they have a chance to leave another legacy. They can put partisan arguments aside and finally close deals that should have been made years ago.