End of the 'budget hawks'? US debt hits $21 trillion

U.S. national debt passed an ugly milestone on Thursday.  The Treasury Department announced that the debt had passed $21 trillion.  It passed $20 trillion just six months ago and is expected to rise another trillion dollars by this time next year.

Washington Examiner:

Federal borrowing has been on the rise again since February, when Congress passed legislation to suspend the debt ceiling.  That move allowed the government to borrow as much as it needs to fund the activities approved by Congress.

Under the law passed in February, the government will not face any borrowing limit until March 1, 2019.  At its current pace, the government is on track to add at least $1 trillion to the national debt by then.

For example, the debt grew by more than half a trillion dollars in the six weeks since the debt ceiling was lifted on Feb. 9.

A large part of the national debt reflects the federal budget deficit, or the amount of spending above the revenues collected by the government.  But the debt is rising faster than the amount of the budget deficit, as it also reflects things like federal lending for student loans and mortgage programs.

One of the driving forces pushing the debt upward is interest payments on that debt.  Rising interest rates will increase  the amount the government needs to spend on debt servicing:

It also assumes only modest interest rate increases, which is important given that the national debt already sits at $20 trillion and is slated to increase by another $10 trillion over the next decade.  CBO estimates that each one-point rise in interest rates adds $1.6 trillion to the ten-year budget deficit – $262 billion of which comes in the tenth year, as costs accelerate.  Thus, a four-point interest-rate hike would cost taxpayers $6.4 trillion over the decade, and more than $1 trillion in the tenth year alone – far more than the cost of defense or Medicaid spending.

The Republican Party – once the party that stood for lower deficits and reducing the national debt and which controls the House, the Senate, and the White House – has become the party of big spenders.  The so-called "budget hawks" who used to have some influence on policy have gone to ground and have become irrelevant.

We can blame entitlements like social security and Medicare, and we should.  We can blame Democrats, and we should.  We should blame establishment Republicans.  But ultimately, you don't have to go any farther than the image looking back at you in your mirror to find who is at fault for these obscene deficits.  Nobody cares enough about deficits and the debt to punish profligate lawmakers who so cavalierly play with our children's and grandchildren's future.  And when the crunch comes – and it's surely coming – the "cure" will be far worse than we can imagine.

The reason nothing is done about the deficits and national debt is because balancing the budget and reducing the national debt would mean inflicting enormous pain on ordinary Americans.  Social Security and Medicare are middle-class government goodies, and cutting them would affect millions of people negatively.  Eventually, because the spending on those programs is unsustainable, we will be forced to cut them anyway. 

Those few budget hawks left in Congress were MIA during the tax and budget debates last year.  You'd hear an occasional yelp of pain from some back-bench Republican, but the drive to pass tax cuts and keep the government operating meant there was largely silence from senior Republicans.

The once great party of middle America has abandoned responsible governance to maintain its power.

U.S. national debt passed an ugly milestone on Thursday.  The Treasury Department announced that the debt had passed $21 trillion.  It passed $20 trillion just six months ago and is expected to rise another trillion dollars by this time next year.

Washington Examiner:

Federal borrowing has been on the rise again since February, when Congress passed legislation to suspend the debt ceiling.  That move allowed the government to borrow as much as it needs to fund the activities approved by Congress.

Under the law passed in February, the government will not face any borrowing limit until March 1, 2019.  At its current pace, the government is on track to add at least $1 trillion to the national debt by then.

For example, the debt grew by more than half a trillion dollars in the six weeks since the debt ceiling was lifted on Feb. 9.

A large part of the national debt reflects the federal budget deficit, or the amount of spending above the revenues collected by the government.  But the debt is rising faster than the amount of the budget deficit, as it also reflects things like federal lending for student loans and mortgage programs.

One of the driving forces pushing the debt upward is interest payments on that debt.  Rising interest rates will increase  the amount the government needs to spend on debt servicing:

It also assumes only modest interest rate increases, which is important given that the national debt already sits at $20 trillion and is slated to increase by another $10 trillion over the next decade.  CBO estimates that each one-point rise in interest rates adds $1.6 trillion to the ten-year budget deficit – $262 billion of which comes in the tenth year, as costs accelerate.  Thus, a four-point interest-rate hike would cost taxpayers $6.4 trillion over the decade, and more than $1 trillion in the tenth year alone – far more than the cost of defense or Medicaid spending.

The Republican Party – once the party that stood for lower deficits and reducing the national debt and which controls the House, the Senate, and the White House – has become the party of big spenders.  The so-called "budget hawks" who used to have some influence on policy have gone to ground and have become irrelevant.

We can blame entitlements like social security and Medicare, and we should.  We can blame Democrats, and we should.  We should blame establishment Republicans.  But ultimately, you don't have to go any farther than the image looking back at you in your mirror to find who is at fault for these obscene deficits.  Nobody cares enough about deficits and the debt to punish profligate lawmakers who so cavalierly play with our children's and grandchildren's future.  And when the crunch comes – and it's surely coming – the "cure" will be far worse than we can imagine.

The reason nothing is done about the deficits and national debt is because balancing the budget and reducing the national debt would mean inflicting enormous pain on ordinary Americans.  Social Security and Medicare are middle-class government goodies, and cutting them would affect millions of people negatively.  Eventually, because the spending on those programs is unsustainable, we will be forced to cut them anyway. 

Those few budget hawks left in Congress were MIA during the tax and budget debates last year.  You'd hear an occasional yelp of pain from some back-bench Republican, but the drive to pass tax cuts and keep the government operating meant there was largely silence from senior Republicans.

The once great party of middle America has abandoned responsible governance to maintain its power.