No one seems to be talking about the national debt, which hit a whopping $28 trillion this month. Does anyone care? We should.
I know and realize our country is fighting this deadly pandemic. But there will always be a good excuse for spending trillions in borrowed funds that we simply do not have.
President George Bush doubled the national debt from $5 trillion to $10 trillion to pay for the wars after our nation was attacked on 9/11 and for other social programs. President Barack Obama doubled the debt from $10 trillion to $21 trillion during the Great Recession and President Donald Trump took it to $27 trillion during the COVID-19 crisis.
The water is flooding the engine room. How much water can this ship take on before it sinks? You know the story and you have seen the movie. The national debt issue is alarming.
Recently the Congressional Budget Office, a bipartisan federal agency that analyzes the economy for Congress, came out with its report on the U.S. financial status: “A growing debt burden could increase the risk of a fiscal crisis and higher inflation as well as undermine confidence in the U.S. dollar, making it more costly to finance public and private activity in international markets.”
And the CBO outlook does not even include the $1.9 trillion stimulus bill that Congress just passed. That relief package, which will be financed with borrowed money, will just add to the national debt. In other words, we are spending money we do not have.
I am not arguing against the need for COVID-19 packages, current or past passed by Congress. What I am suggesting is we as Americans need to realize we are just borrowing money we do not have. One day, it will matter and when that “one day” does eventually come, it will really hurt our nation to levels no one really knows. My immigrant parents always stressed to me to not spend money I didn’t have. While credit is an essential ingredient in today’s world, unsustainable and crushing debt is not.
By 2051, the federal debt is expected to double as a share of the economy. The Peterson Foundation recently noted that net interest on the national debt will total $61 trillion over the next 30 years, growing to 47 percent of federal revenues by 2051.
Former House Speaker Paul Ryan was known as a federal budget guru. He once told me that 30 years ago, Congress debated 70 percent of the national budget to prioritize spending needs, and the other 30 percent in the budget was spoken for and committed to entitlement programs. Today the Congress debates 30 percent of the budget, the other 70 percent is already spoken for. But the next fact was the most frightening: In less than 30 years, 100 percent of the federal budget will be committed to entitlement programs and interest on the national debt. Funding for defense of our nation, for the needs of our children and seniors, for veteran care, etc., will have to be done with borrowed money.
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President Barack Obama got it right when he named the Simpson Bowles Commission, made up of Americans from both sides of the political aisle, to come up with recommendations to reduce and pay down the national debt. The commission failed because the president did not do a good job of pushing and lobbying members to approve their own recommendations. Still, the concept was right. We need this type of commission once again.
No one is talking about our national debt. No one seems to care. But the engine room is taking on more and more water. When will the alarm bells start sounding to force our hand to tackle this issue as Americans? When will this national debt financed by the Chinese and others by the purchase of our securities matter? We need to pay attention. Our great country’s future may depend on it.
Alex Sanchez is president and CEO of the Florida Bankers Association, which has membership of small, regional and large financial institutions that together employ tens of thousands of Floridians, safeguard more than $500 billion in deposits and extend more than $135 billion in loans. Sanchez serves on the EXIM Bank Advisory Committee. He was a member of the Federal Retirement Thrift Investment Board from 2003-2010.