US national debt: An unsustainable trajectory
Over the past few decades, the U.S. federal government has abandoned any and all notions of fiscal responsibility, leading to a massive increase in America's national debt, which will produce dire consequences sooner than most Americans probably reckon.
As of January 2021, the U.S. national debt has surpassed $27 trillion. In 2000, the national debt was only $5 trillion.
Even more ominous is the current U.S. debt to GDP ratio, which has skyrocketed to 127 percent. In 2000, the debt to GDP ratio was only about 55 percent.
In other words, in the past two decades, the United States has transformed from a fiscally healthy nation to a debt-ridden country on the verge of insolvency.
How did this happen so quickly? In short, the U.S. government abandoned the commonsense economic policy that the nation abided by from 1789 until the early twenty-first century.
Historically, the U.S. national debt has ebbed and flowed. For the vast majority of American history, the national debt has grown during times of war and shrunk during peacetime.
For example, after the Revolutionary War, the central government was deep in debt. Yet, by the end of Thomas Jefferson's presidency, the national debt had been drastically reduced because the nation had paid down the debt incurred during the War for Independence.
The same pattern of increasing debt to fight costly wars, especially the world wars of the twentieth century, followed by large debt reductions in times of peace and prosperity kept the U.S. fiscal ship afloat and headed in the right direction.
Unfortunately, this commonsense economic strategy, which both parties had embraced, has been abandoned by both in recent years.
After the September 11, 2001 terrorist attacks, the United States fought a series of costly wars in the Middle East. Although the brunt of the fighting had ended by 2010, this was not followed with the typical postwar belt-tightening that kept the national debt in check for hundreds of years.
After the national government spent trillions in Afghanistan and Iraq, Obama entered office, and with Congress's blessing, he spent trillions more on stimulus, health care, welfare programs, etc.
Following Obama's spendthrift ways, the Trump administration continued the extravagant spending, especially on rebuilding the nation's military.
Apart from a small blip on the historical radar, when the Tea Party movement gained prominence, the de facto solution in Washington, D.C. has been to borrow and spend, regardless of the long-term consequences.
Although borrowing and spending in times of true peril, like a war that threatens our nation's security and sovereignty, is necessary, it is absolutely not when the fighting ends.
However, it seems as if this has no bearing on our nation's leaders, who are more than content to print, borrow, and spend more money than ever before.
Unfortunately, the federal government's response to the coronavirus pandemic has made this problem much worse. In 2020, trillion-dollar relief bills became the new normal. And it is all but guaranteed that this exorbitant spending will continue when the Biden administration enters the Oval Office in a few weeks.
However, this unsustainable spending and debt accumulation cannot continue unimpeded much longer.
Eventually, economic reality will set in. Americans will encounter inflation, stagnant wage growth, high unemployment, and all the other horrors that inevitably come after decades of wanton spending and debt accrual.
History is littered with examples of once great civilizations that came crashing down due to fiscal irresponsibility. From ancient Rome to modern-day Greece, the list is long.
The question is, will the United States, the most prosperous nation in the history of the world, succumb to the same fate? We might find out sooner than we would like to know.
Chris Talgo (firstname.lastname@example.org) is an editor at The Heartland Institute.
Image: Treasury Dept.