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The National Debt Is Coming Due, Just Like We Told You

By 2020, interest on the debt will cost more than Medicaid. By 2025, it will cost more than defense spending. And that's just the start.

What happens when you borrow the equivalent of your annual income and those low, low teaser rates start to increase? Congratulations, America, you're about to find out.

The Wall Street Journal reports some non-shocking, non-surprising news:

Wisconsinart, Dreamstime.comWisconsinart, Dreamstime.comIn 2017, interest costs on federal debt of $263 billion accounted for 6.6% of all government spending and 1.4% of gross domestic product, well below averages of the previous 50 years. The Congressional Budget Office estimates interest spending will rise to $915 billion by 2028, or 13% of all outlays and 3.1% of gross domestic product....

It will spend more on interest than it spends on Medicaid in 2020; more in 2023 than it spends on national defense; and more in 2025 than it spends on all nondefense discretionary programs combined, from funding for national parks to scientific research, to health care and education, to the court system and infrastructure, according to the CBO.

A quick recap of our dismal national finances: The U.S. economy generates about $21 trillion in annual activity. Debt owed to the public comes to about $15.5 trillion, but when you add intra-governmental debt (which you should, because it represents actual commitments to pay), the figure is...about $21 trillion.

This is not good, both for obvious and and for less obvious reasons. Among the obvious problems: When you have to pay more in interest, it crowds out your ability to spend on other things. If you're a government, it also might mean that you raise taxes or inflate your money. (You could also cut spending, but politicians tend to resist that for as long as possible.)

The federal government spends about $4.4 trillion a year, split among several categories, including what is considered "mandatory" and "discretionary." The mandatory stuff includes entitlements, such as Social Security, Medicare, and Medicaid. Congress doesn't need to vote on this spending for it to continue. Discretionary spending includes spending on the military, homeland security, schools, and other stuff that does need to get voted on. The percentage of spending that is mandatory has grown from around 30 percent in 1962 to about 62 percent of federal outlays today. Discretionary spending comes to about 30 percent, and interest on the debt rounds out the rest. Government spending will increase whether a divided government does anything or not. And, absent significant changes in current law, what the government spends on will be more and more limited. From a libertarian perspective, less government spending is a good thing, but we're not really going to get that, even with a gridlocked Congress.

More importantly and less obviously, high levels of national debt exert a downward pressure on long-term economic growth. In a 2012 paper, economists Carmen Reinhart and Kenneth Rogoff define a "debt overhang" as a situation in which the debt-to-GDP ratio exceeds 90 percent for five or more consecutve years. After looking at 26 debt overhangs in 22 advanced economies since 1800, they conclude that "on average, debt levels above 90 percent are associated with growth that is 1.2 percent lower than in other periods (2.3 percent versus 3.5 percent)." These overhangs last a long time—in their sample, the average lasted 23 years—creating a cumulative loss in economic growth that's "nearly a quarter below that predicted by the trend in lower-debt periods."

That work has been validated by left-wing economists associated with the University of Massachusetts, who were critiquing an earlier version of Rinehart and Rogoff's work that had mistakenly found that debt overhangs reduced growth below zero. The critics conclude that "the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent.

Whether or not there is anything magical about 90 percent, there's every reason to be concerned when the government is spending far more than it can ever collect in taxes. We're essentially entering an era where "debt overhang" is the new normal and there's no sign that's going to change any time soon.

Two percent growth isn't nothing, of course. But it's well below the historical average since World War II, and the difference really compounds over the years:

Reason.comReason.com

We're already poorer for lower economic growth, even as the government spends more (and borrows more to cover those costs). The Congressional Budget Office (CBO) says the economy grew by 3.1 percent in 2018, but it estimates that annual growth is going to slow to 1.7 percent annually between 2023 and 2028.

Bonus link: More than seven years ago, Mercatus Center economist and Reason columnist Veronique de Rugy and I explored a way to balance the budget without raising taxes. Check that out here.

CORRECTION: Carmen Reinhart's name was misspelled in the original post.

Photo Credit: Wisconsinart|Dreamstime.com

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  • Don't look at me!||

    There will be no efforts spared to cause inflation. It's the only way out.

  • Slocum||

    That doesn't even really work. The existing debt is constantly being rolled over and, since the budget is not close to being balanced, new debt is also being taken on. If inflation rises, it will immediately cost the government more to roll over old debt and take out new debt. Also, some of the debt is in TIPS which, by definition, inflation can't help to pay off.

  • rocks||

    Reason clearly does not understand how central banking works. Look at Japan as an example of just how far the game can be taken. The US has a very long ways to go down the path of creating more debt and entrapping the population in a perpetual cycle of debt serfdom, which the public itself refuses to give up because escape is even more painful.

  • D-Pizzle||

    Aren't TIPS engineered securities created by non-public financial institutions. If I'm not mistaken, the underlying public debt remains fixed-interest debt.

  • JFree||

    TIPS may or may not be created by private financial institutions (idk) but they are sold directly by the Treasury dept (as well as banks/brokers) and Treasury is obligated to follow the terms of those issuances. So at minimum they are effectively/contractually principal-adjusted debt even if the interest is fixed. Current TIPS outstanding is $1.4 trillion

    But the bigger point really is that roughly half the total debt ($9.2 trillion) is relatively short-term notes (maturity 2-10 years) and another $2.3 trillion is T-bills which mature in less than 1 yr. So there is no benefit to the govt to let inflation rip and screw bondholders.

    And the 2nd biggest chunk of govt debt is the intragovtl holdings (Government Account Series) of $4.3 trillion. Mostly those 'trust funds' of SS/Medicare. idk if those are long-term - but if they are then any inflation will simply obliterate those accounts VERY quickly. So instead of kicking that can down the road, that can will head straight back into the faces of retirees - who by the way happen to be the most active and the most selfish and the biggest trough-sucking voters.

    No - the unfortunate reality is that banks, bondholders, and retirees are all firmly on the side of deflation not inflation. So the Japan scenario - multi-generational stagnation - is the path we're heading down.

  • Liberty Lover||

    I doubt even inflation can be a way out at this point. Total economic collapse and the government having to spend only what they can tax, as no one will buy government debt after a collapse, will be the end result.

  • ThomasD||

    It's not that inflation will work, it's that inflation is the tool most likely to be employed.

    History is rife with currency debasement.

    That said. The 'problem' of the debt is like the 'problem' of homelessness (or illegals in cages) it only gets discussed by the likes of Gillespie when it suits his politics.

  • Charles Barr||

    The DEBT is not the DEFICIT. And the DEFICIT is not the DEBT. They are separate problems.

    Government BORROWING drives up the debt, not government SPENDING.

    The solution to our debt problem is simple: STOP ISSUING DEBT-BASED MONEY! Begin issuing pure "unbacked" fiat money to fund the deficit, rather than going further into debt. The inflationary impact of unbacked dollars is no worse than the inflationary impact of the same amount of debt-backed dollars. Issuing unbacked dollars will halt the increase in the national debt and its crushing $430 billion in annual interest. Paying off part of the maturing debt each year and rolling over the rest will eventually bring the national debt (and its taxpayer-financed interest payments) down to zero. See www.fixourmoney.com .

  • Bubba Jones||

    "Government BORROWING drives up the debt, not government SPENDING."

    I think these are related.

  • Enemy of the State||

    A guy calling for a pure fiat currency issued to pay off the debt is a money crank, not a "goldster"...

  • Charles Barr||

    Actually, I am a "goldster". But pure or "unbacked" fiat money is much less destructive to the economy and to personal liberty than the "debt-backed" fiat money we use today. See www.fixourmoney.com .

  • Charles Barr||

    How much would they borrow if there were no deficits? None.
    How much would they borrow if they issued "unbacked" fiat money? Also none.

  • Charles Barr||

    I can't issue money. The government can, without borrowing, even if it runs a deficit.

    Since the deficit is not going to end anytime soon, which is worse, fiat money by itself or fiat money accompanied by a big and growing national debt?

  • BambiB||

    "Debt-backed" money is only as good as the promise to pay.
    "Unbacked" money is what you get in a Monopoly™ game.

  • ||

    All money is a symbol that represents wealth, not the wealth itself. Can you burn gold for heat? Use it to build a warm shelter? Eat it? The answer to all of that is no. Gold has value beyond limited industrial uses because people believe it has value, just like paper notes or round rocks or pretty seashells.

    Even in those industrial uses, its value depends on what wealth it is used to make -- it's worthless sitting in a vault in that context.

    All money, including gold, is fiat currency. It has value because one guy says so and others believe him. If people lose that belief, it becomes just as worthless as most other money, and even more worthless than paper notes -- at least you can use paper as insulation or burn it for heat.

  • Robert Crim||

    Unconstitutional: Perry v. United States, 294 U.S. 330 (1935).

  • Charles Barr||

    Constitutional: Unbacked U.S. currency has existed since the Civil War and still exists today in the form of circulating coins. In addition, paper money in the form of "United States Notes" that circulated widely until the 1980s is still legal tender today. (See https://en.wikipedia.org/wiki/United_States_Note .)

  • Charles Barr||

    Perry v U.S. related specifically to the enforceability of a gold clause on a government bond. Nowhere did it forbid the U.S. from issuing unbacked fiat money, which in fact it was already issuing in the form of coins and paper money. (See https://en.wikipedia.org/wiki/United_States_Note .)

  • Charles Barr||

    Yes, I'm aware that I agreed with Nolan in this instance.

  • BambiB||

    That's not a "way out".

    The only way out is to slash spending.
    Slash the military budget (Demoncraps will cheer!)
    Slash the welfare budget (Republitards will cheer!)

    And take away the women's vote. They're the ones who have dug this financial pit.
    This is the price of allowing women to vote - financial ruin.
    http://www.people.fas.harvard......tKenny.pdf

  • ||

    Stripping women of citizenship as a solution to mostly men voting for reckless spending? Okay, who let the totalitarian guy in here?

  • Lester224||

    Good luck with that Bambi. I'd talk about how anti-libertarian taking away voting rights is if the proposal weren't so absurdly unlikely to be taken up with anybody with brains. Including those with brains and a penis.

  • ||

    Letting women vote is what is absurd.

  • loveconstitution1789||

    Dont worry, Gillespie is against cutting taxes.

    He will save us!

  • Remember to keep it all polit||

    No, that's Trump that raised taxes. Remember tariffs? $200B worth? That's a tax increase, goober.
    Now see if you can find the right Reply button to click around me.

  • Nardz||

    Weird, tariffs haven't increased my costs at all.

    My bad for breaking the groupthink circle jerk on that particular dogmatic talking point though.

  • Last of the Shitlords||

    Sounds like Hihn.

  • loveconstitution1789||

    I got the blowfly, dont worry. He was flying around bugging everyone.

    I just hit it with my reply button.

  • Brett Bellmore||

    At least we don't have to ask who this "John Galt" is; We already know.

  • Ygrittesngravy||

    Slight correction, Buttplug- "half the acceleration" refers specifically to the second derivative, not the first. So half the delta in economic growth is down to spending, not the entire GDP growth reading.

  • Ygrittesngravy||

    Down to. Due to. Ascribed to. Take your pick.

    The GDP growth reading we refer to- in the instance of the article, 2.2% and 2.9%- are themselves measurements of change. The article refers to the change in the growth rate, not the growth rate itself (in other words, acceleration of the growth rate).

    Put another way- car travelling 30 mph reaches a hill, and speeds up to 60. If half of the acceleration is due to putting one's foot on the gas pedal and the other half going downhill, that accounts for 15 mph, not 30.

  • Mickey Rat||

    So we are entering a debt state where it does not really matter what the rate of taxation is. Perhaps Chapman and Suderman could bitch about the spending that offends them rather than the lack of taxation.

  • Robert Crim||

    Socialists never do, Since the objective is to make government an instrument of crime, if the people won't support the increased taxation the socialists demand, make the programs automatic anyway, create constituencies dependent on them, borrow the money to fund them, and leave the taxation for the future, to be paid by the children of the "selfish" citizens who said "no."

    Why should anyone be surprised at this? It's a stock response and has been for a hundred years.

  • 2VNews||

    We are on autopilot to a major financial crisis that will change this country to more freedom or dictatorship. Elections just change the speed we travel to that destination.

  • WC Varones||

    Reinhart, not Rinhart.

  • loveconstitution1789||

    Luckily, massive cuts to spending will be coming as the only solution to the problem.

  • No Yards Penalty||

    I would amend that sightly to Aggressively Stupid.

  • Last of the Shitlords||

    You two fags are the dumbest posters here. Chemjeff gets an honorable mention, as does Tony.

  • ThomasD||

    Right because, should the progressives pass significant cuts to spending Trump will no doubt veto them.

    To be sure.

  • Remember to keep it all polit||

    Yes, all those minus $200B in tax decreases are surely helping.

  • JesseAz||

    Of there were no increases in spending last year the deficit would have reduced.

    If there were no tax decreases last year, deficit would have still increased.

    Baseline budgeting assumes a federal spending growth rate higher than what gdp growth is. I'm sorry some of you are too fucking stupid to get this.

  • grb||

    The below is a quote from the Congressional Budget Office on the effects of Trump's tax cut. Let me know if you're too fucking stupid to understand it. I'm always willing to educate the economically illiterate - even if they are dumb enough to believe in supply-side magic purple unicorns.......

    "To construct its baseline budget projections, CBO incorporated the effects of the tax act, taking into account economic feedback—that is, the ways in which the act is likely to affect the economy and in turn affect the budget. Doing so raised the 11-year projection of the cumulative primary deficit (that is, the deficit excluding the costs of servicing the debt) by $1.3 trillion and raised projected debt-service costs by roughly $600 billion. The act therefore increases the total projected deficit over the 2018–2028 period by about $1.9 trillion."

    https://www.cbo.gov/publication/53787

  • Last of the Shitlords||

    It's funny how a dumb cunt, such as yourself, feebly attempts to impugn the intellect of others who are quite clearly your betters.

    You don't even have a counterpoint to what he says. You know he's right, and it angers you. Best you just learn to obey.

  • grb||

    Right-wing types are as dumb-as-a-box-of-rocks about anything re economics. You can always count on them to gush over a tax revenue increase to justify their voodoo nonsense. Newsflash : In the past half-century federal tax revenues have grown from year to year 46 of 50 times. The numbers since the recession (in trillions) :

    FY 2009 : 2.10
    FY 2010 : 2.16
    FY 2011 : 2.30
    FY 2012 : 2.45
    FY 2013 : 2.77
    FY 2014 : 3.02
    FY 2015 : 3.25
    FY 2016 : 3.27
    FY 2017 : 3.32
    FY 2018 : 3.34 (estimated)

    Revenue increased under Obama more than anything Trump is likely to accomplish. Meanwhile, the cost of government expands with an equal regularity. The exact same scope of government costs more from year to year. JesseAZ's "point" that magic tax cuts magically reduce the deficit if only you magically ignore the cost side of the ledger is - well - moronic. Look : If you're worried about deficits you're not a Republican, since their only interest is in maxing out the nation's credit card on a bender. But if you are concerned, here are the basic questions : (1) Does growth from tax cuts offset their lost revenue? Trump's don't come remotely close. (2) Do the cuts cause a drop in the revenue which would have been collected otherwise? Trump's cause a massive drop. (3) Does it makes sense to pile up debt during an economic expansion? Not a bit - unless you're grotesquely irresponsible - id est a Republican

  • Migrant Log Chipper||

    Yawn..…..fucking moron, back to DU twit.

  • Last of the Shitlords||

    Such disingenuous bullshit. So cherrypicked. Did you cut and paste most of that from Media Matters or something? Funny how you conveniently start in 2009, to make it look like Obama somehow presided over some kind of massive growth.

    Please just stop, I'm embarrassed for you.

  • TrickyVic (old school)||

    From 2010 to 2018 the Rs were in control of the purse.

  • Robert Crim||

    In the past half century (which is my adult life), the value of a dollar has fallen from a baseline of 100 to less than 4. But, why listen to me? I'm just a box of rocks!

    Oh, who is John Galt?

  • loveconstitution1789||

    Looks at the trolls stumbling over themselves to up web traffic numbers for Reason.

  • Remember to keep it all polit||

    If you try hard enough, you can regress back to 2nd grade with all this note passing around my post. Try try try!

  • loveconstitution1789||

    Maga

  • Alan Vanneman||

    Gee, it's too bad the Koch organization played a principal role in blowing a $1.5 trillion hole in Paul Ryan's supposedly revenue-neutral tax reform package, by forcing Ryan to remove his "border-adjustment tax". Maybe it was a bad idea, but the Kochs could have proposed a substitute measure to maintain revenue neutrality, couldn't they? Or was the family calculator busted that day?

    Seems like the Kochs don't object to a little deficit spending as long as the cash is going into their hip pocket.

  • Remember to keep it all polit||

    Oh gosh the libertarians objected to a tax increase the sky is falling the wolves are coming oh me oh my

  • Juice||

    maintain revenue neutrality

    Fuck revenue neutrality. Cut spending. Start with the bloated military-intelligence-security complex.

  • End Child Unemployment||

    Go beyond that, cut everything. Burn the bridges using the poor uneducated children as kindling.

    I'm fucking sick to death of all the cries of the sky falling when the bullshit spending keeps flowing. They'll shutter national parks and schools and museums, because those are the parts of the government us stupid idiots like, but they'll keep the taps to Import Export bank and a million other crony programs wide open.

    Cut it all. Turn the US into Mad Max. I'm ready motherfuckers!

  • Last of the Shitlords||

    You nailed it. They punish us for wanting to cut spending by cutting things they don't have to, instead of the stuff they are getting paid off to fund.

    "Nothing left to cut!"

  • BYODB||

    So we should start with the smaller budget item? I guess that makes sense to some people. I'd be fine with it, I suppose, except that entitlements will get any money diverted away from the military.

  • JesseAz||

    Tax receipts increased this year dumbfuck. Spending increases went up faster.

  • BYODB||

    Of course, never mind that increasing taxes won't have any effect on the deficit. The government will simply spend even more.

    Cuts to spending is the only option, and it's specifically the option that no one in government is going to take.

  • Brett Bellmore||

    Trying to balance the budget by increasing taxes is like trying to pull an alcoholic out of a drinking binge by giving him an extra case of liquor. No matter how much revenue they have, they spend it all, and then borrow.

    It's because a politician who's willing to borrow to buy votes can always outbid a politician who tries to buy votes with just current revenues. Once borrowing to buy votes is on the table, a democracy always spends more than it brings in, until the crash. ALWAYS.

    Every system has it's failure modes, this is one of democracy's. We were on this road 20, 30 years ago. The only difference today is that we're further along it, and arguably past the point of no return.

    It's like yelling, "Stay away from that cliff!" after the car has already gone over the edge. We should be discussing how to manage the crash to minimize the damage, not how to avoid it. It's already baked in.

  • Moo Cow||

    Dont worry. The king of debt will just default.

  • loveconstitution1789||

    Hillary never became president.

    I understand the clintons have quite a nest egg after their bankruptcy.

  • Weigel's Cock Ring||

    Gillespie, you'd have a lot more credibility if you didn't constantly insist that your venerated hero Block Insane Yomomma bears no responsibility at all for this mess.

  • Leo Kovalensky II||

    I would love to see a quote of him saying that.

  • loveconstitution1789||

    See article?

  • CE||

    The problem is worse than the debt to GDP ratio would tell you. GDP includes government spending. So if the debt is 21 trillion and GDP is 21 trillion and government spending is 4 trillion, the ratio of debt to the non-government, value-creating economy is 21 to 17, not 1 to 1. But really the productive economy has to pay for that 4 trillion in spending each year, so the real debt to available new wealth created is 21 to 13.

  • TwelveInchPianist||

    "but when you add intra-governmental debt (which you should, because it represents actual commitments to pay), the figure is...about $21 trillion."

    I'm not sure that this makes sense. The actual commitments to pay are reflected in the programs that the debt funds, not the debt itself.

  • Fairbanks||

    Agreed. The fact that this represents "actual commitments to pay" is irrelevant, when the party that is owed is part of the government: if one branch of the Federal government owes money to another branch the net debt is zero. If you personally have two bank accounts, both with $100, and you have no debt, and then one of your bank accounts "lends" money to the other, you have one bank account with $200 in cash and another with zero. The fact that one account has a loan payable of $100 and the other has a loan receivable of $100 is irrelevant, since you own both accounts. You, in total, still have $200 of cash and no debt. It's the same principle when the social security administration lends excess FICA tax receipts to the treasury, which is one example of intra-government debt.

  • Brett Bellmore||

    Right, it's the other side of the SS "Trust fund" being a joke. Inter-departmental debts in the same government are neither real debts nor real assets, they're just accounting fictions.

  • Arizona_Guy||

    It's like spending all your money but putting IOUs (to yourself) in your piggy bank.

  • Brett Bellmore||

    So, in addition to being crazy, your reading comprehension is shot?

  • JFree||

    on average, debt levels above 90 percent are associated with growth that is 1.2 percent lower than in other periods (2.3 percent versus 3.5 percent

    Even if it doesn't result in lower growth, it always results in an internal transfer from the rest of the economy to the financial sector which collects that interest. And if the economy grows, interest costs will rise in synch - ensuring that the financial sector gets first dibs on all incremental growth as well.

  • chipper me timbers||

    Yep, they are fucked.

    Luckily, it's not my problem.

  • Last of the Shitlords||

    How is it not? Hospice?

  • dchang0||

    It's about time. Watch as the most profligate moochers get wiped out spectacularly.

    The frugal and productive who saw this coming will sadly get hurt too in a system collapse, but they'll bounce back faster.

  • sgreffenius||

    Glad to see good article on this subject. We used to think annual deficits over $200 B were bad: unsustainable. Now just the interest is over $200 B, and we don't seem to care.

    The pattern is so depressingly repetitive since Rome: unsuccessful military adventures and high debt lead to ruin.

  • Brett Bellmore||

    You stop worrying about the cliff once you go over it. Time to worry about the landing, instead. It's going to be painful, but we still have choices to make which will influence how long it takes to recover from that crash landing.

    It's too late to balance the budget, it was a decade ago. It's time to figure out how we're going to manage the crash and recovery. Talking about balancing the budget is just a distraction, it will happen automatically after the crash, when nobody will loan the government money anymore.

  • Mike6869||

    The U.S. debt is the sum of all outstanding debt owed by the federal government. It exceeded $21 trillion on March 15, 2018. The U.S. Treasury Department's "Debt to the Penny" shows the current total public debt outstanding. This figure changes everyday. The debt clock in New York also tracks it.

    Two-thirds is debt held by the public. The government owes this to buyers of U.S. Treasury bills, notes, and bonds. That includes individuals, companies, and foreign governments.

    The remaining third is intragovernmental debt. The Treasury owes this to its various departments who hold Government Account securities. Social Security and other trust funds are the biggest owners. They have been running surpluses for years. The federal government uses these surpluses assignment helper to pay for other departments. These securities will come due as baby boomers retire over the next two decades. Since Social Security and trust funds are the largest owners, the answer as to who owns the U.S. debt the most would be: everyone's retirement money.

  • tlapp||

    Actually read the original Charter of SS at SSA.gov All of the surpluses were required by law to go to the general fund. No one was allowed to do anything else with the money.
    Make no mistake it was a plan to raise taxes for FDR's very expensive centrally planned economy under the ruse of a retirement plan.

  • tlapp||

    Some years ago I worked as a contractor on a government project. When myself and others wrote up a plan with issues and solutions we got the peculiar response. They agreed with our list of issues that needed to be addressed but said it would not happen because government was reactive, not proactive. Of course the tech implementation never happened because they did not address the obstacles, contract was ended and the money wasted. 4 years later I got called for a job by a company that was to start the same job over again. I wasn't interested but heard they had the same result and the same wasted money.

    The debt, SS and Medicare will be addressed one day after financial catastrophe and not a moment sooner.

  • Warren||

    JESUS FUCKING CHRIST REASON
    If you're going to embed graphs shrunk down and pixellated beyond any ability to read them, the for fucks sake put a link to where we can see them full size.

  • Stevecsd||

    Nobody has even mentioned the unfunded liabilities in Social Security & Medicare.

    According to the MacIver Institute, in 2014, it was $49 trillion for Social Security alone.

    I'll let someone else find the number for Medicare.

    We need to add all of this to the current national debt of $21 trillion. So we're up to $70 T, excluding Medicare, and a number for SS that is 4 years old.

  • JFree||

    Unfunded liabilities assume the promises made will be kept. They won't. When the 'trust funds' are empty - THAT is when the fight will occur about exactly how those promises will be broken.

  • Brett Bellmore||

    Actually, since the "trust funds" contribute no capacity at all to make the payments, the fight occurs when the cash flow goes significantly negative, not when the nominal 'investments' have been spent.

  • JFree||

    I disagree. The bonds in the 'trust fund' can be sold to raise cash as long as they exist. The Treasury market is the most liquid in the world. It may change interest rates a bit but that's only for wonks to worry about. When the fund is empty, that's when the legal requirement to cut SS payments - to equal the specific revenues from SS taxes - kicks in. Right now, that's a 20% cut. If that sort of future cut hasn't evinced the slightest interest/concern from regular folks, I doubt 30% or some other future number will. The only things that's real is - what about the NEXT SS check.

  • blondrealist||

    Interest rates and debt service costs are going up, but I wonder if the Treasury will just issue short term bills and notes, which would likely keep costs lower. There been plenty of commentary about what federal debt service will cost when the 10 year Treasury goes from 3.25% up to 5% (which may or may not happen soon) - but there's nothing that I know of that says that the Treasury has to keep issuing new ten year bonds.

  • Bubba Jones||

    Federal tax receipts as a function of GDP seem pretty consistent over the decades.

    Perhaps we should make an effort not to spend more than 17%. Shall we try that?

    https://fred.stlouisfed.org/series/FYFRGDA188S

    Meanwhile spending hovers near 20%.
    https://fred.stlouisfed.org/series/FYONGDA188S

    Tax revenues are never going to make that sustainable.

  • Uncle Jay||

    "Debt, what debt?" - Boris Yeltsin

  • MikeP2||

    Wow Nick. You think the debt is 'real'? That it will ever come due?

    Welcome to the world of fiat currency. Debt is meaningless. All it takes is a change in the management of the inflation rate.

    Social security liabilities. Guess what. The feds just underestimate inflation YoY and provide an adjustment to SS outlays that is less then actual, providing a slow degradation of the liability to recipients. Do that for the next 30 years and 'poof', balanced sheet. Yeah, those relying on SS get screwed, but when was that ever not true.

    Treasuries, bonds, debt of anyform. Yeah, inflation. All the problems disappear with simple math.
    Except everyone's savings. But who has that anymore?

  • Robert Crim||

    By selling all the land it stole from the Indians.

    So, how much land is left?

  • newshutz||

    Actually, FedGov owns a lot of land.

  • Sonny Bono's Ghost||

    "pay for Tax-cuts" LOL!

    Idiot.

  • flashgordon||

    It's just insane to me that the Federal government can borrow for expenses (social security is an expense, an aircraft carrier is a capital item) when there wasn't a declared war going on. The Federal government does have some capital spending and it would be ok to borrow for that and I have no idea what that total would be, I'm guessing less than 5 trillion. But allowing someone to pass a bill without rigorous standards of how to pay for it rewards the politicians who are trying to buy votes. How to fix it? Split entitlements into their own portion of the budget. If tax revenue doesn't cover the entitlements, stop paying the entitlements. That balances the budget and stops any politicians with any ideas for new entitlements unless they can think of a way to pay for it. I think the Founders would have written a Balanced Budget requirement into the constitution but they didn't believe a country could consistently borrow that much money.

  • Sonny Bono's Ghost||

    "It will spend more on interest than it spends on Medicaid in 2020; more in 2023 than it spends on national defense; and more in 2025 than it spends on all nondefense discretionary programs combined, from funding for national parks to scientific research, to health care and education, to the court system and infrastructure, according to the CBO."

    This means that a world war is imminent sometime before the next 7 years is out. I was fun chatting with you all.

  • Robert Crim||

    Who is John Galt?

  • AD-RtR/OS!||

    Have to pass a Gross Receipts Tax on all Media - including digital.
    Hey, Zuck....Sergei.....you've made enough money.

  • AD-RtR/OS!||

    That goes double for you, Jeff.

  • Joe_C||

    Carmen's name is still misspelled elsewhere in the article. ;)

  • UFC 231 Live stream||

    UFC 231 Live Streamwhich features the fight between Holloway and Ortega will take place on December 8, 2018. Scotiabank Arena located in Toronto, Ontario in Canada will host the important event.

  • Art Gecko||

    "The mandatory stuff includes entitlements, such as Social Security, Medicare..."

    Social Security and Medicare can be repealed by a simple majority vote. Nothing mandatory about them.

  • Lester224||

    Repubs say "cut more taxes". If you don't cut spending as well cutting taxes doesn't work. The stimulative effect of only cutting taxes (and mostly on those who pay a lot of taxes) is not enough to drive down debt. Politicians won't admit this.

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