The Good News about the U.S. Budget Deficit

Americans are rightly concerned about deficit spending in the United States, especially as directed by the perpetually reckless Congress that is constitutionally mandated to care for the purse strings of the nation.  At present, the President, the House, and the Senate are locked in a strange budget battle that aims to spend trillions of dollars in the years ahead. These proposals are in addition to a standardized set of costs that are around four to five trillion dollars.  The increase in spending is primarily rooted in promises made by President Biden in his campaign and amplified by a growing radical wing within the Democratic Party that views deep spending as a proper response to the structural injustice that is the essential character of the United States. 

Perhaps the first piece of good news is that the American public continues to provide a more generous revenue stream to our reckless legislators every year.  Since 2010, annual revenue for the federal government has grown from 2.16 trillion dollars to an estimated 3.86 trillion for fiscal year 2021.  That is an incredible 79% increase in revenue provided over the past decade by U.S. taxpayers.  This fiscal point cannot be made enough -- it is not a revenue problem, it is a spending problem.  From about 2013 to 2017, spending was about 4.4 trillion dollars and ran about one trillion dollars over revenue each year.  That is overspending a budget by about 25% every year.  This is something the average consumer and citizen is unable to do.  In 2018, 2019, and 2020 spending moved to $4.7T, $5.03T, and $6.9T.  Of course, 2020 was characterized by unlimited checks being sent to taxpayers and unlimited spending to pay for COVID health care and relief.  The current 2021 budget debate is difficult to calculate but is well in excess of $6.9T and could easily be over $9T.  At the heart of this spending addiction is a simple problem -- no emergency spending is temporary.  The emergency funding on COVID 2020 is now a permanent part of the budget and any effort to treat it as contingent is met with the bogus yet effective rhetorical charge of “budget cut.”  The simple good news that arises despite the worst spending on record is that if Congress could ever grow spending less than revenue growth, the U.S. would begin to gradually see declining deficits reaching zero.  That did happen as recently as 20 years ago and could happen again by politically realigning Congress. 

The second piece of good news is the power of U.S. borrowing.  Commentators typically want to lament that we cannot keep mortgaging our future.  We cannot continually borrow.  The rather shocking reality is that we can and we do.  We utilize treasury notes to sell the debt we incur each year.  Imagine for a moment if you could personally sell your own debt.  In other words, third parties would buy your mortgage, car payments, utility bills, college loans and so much more.  The current interest rate for a ten-year U.S. Treasury note is 1.48%.  The U.S. has for decades sold its debt to domestic and international parties.  A common fallacious argument among budget hawks is that this is dangerous since those parties could sell their treasury notes, burn them, or refuse to buy more notes.  The first two options of selling and burning notes have no adverse effect on the U.S.  In fact, if parties decided to destroy notes then they would lose the promise of future returns and help the U.S. even more financially.  None of us likely have a loan option as low as 1.48%.  That means the U.S. has a very cheap credit card for running up charges here at home. 

This disconcerting reality is bound in rhetoric.  The symbolic power and virtue of the United States cause our treasury notes to be viewed as having fidelity and future worth.  That is especially true when weighed against foreign currencies and foreign debts.  Compared to roughly 192 other sovereign options, the U.S. appears to be the best investment.  Though our politicians are exceptionally corrupt and especially deceitful with regard to spending, the global investor sees something larger and more valuable -- the hard-working and ethical character of the general American public.  Incredible increases in productivity alongside phenomenal demand for simple assets such as real estate place the American marketplace as an overwhelmingly attractive investment.  Foreign powers recognize this in the physical desperation of their own population to escape their own sovereignty and join the market of the U.S.  Gallup shows us that just in the Western Hemisphere alone, 42 million people want to come to the U.S. today.  Global remittances, which are dominated by foreign workers sending money home to these desperate locales, are an accelerating marker for the overwhelming fidelity and strength of American productivity.  For many nations, remittances from America are among the top economic inputs to their nation.

Though our congressional members are shocking in their contempt for the same fiscal sanity their citizens must accept every day, our nation remains economically resilient and a much more probable candidate for economic well-being than Russia or China.  This overwhelming testament to the good nature of citizen America overwhelms the corruption of our government. In the political choosing of America versus other nations, there remains only one fiscally sound choice:  the American people.  

Dr. Ben Voth is a professor of rhetoric and director of debate at Southern Methodist University in Dallas, Texas.  He is the author of four books on political rhetoric and American and global affairs. His most recent book, Rwanda Rising documents the importance of debate to prevent unjust violence and encourage political integrity.

Image: CBO

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