Time to talk about our national debt | Don Brunell

Our nation could owe more than $24 billion by 2020 — can we sustain that?

Our nation is on an unsustainable borrowing trajectory and it could get much worse unless voters start asking politicians: “How are taxpayers going to pay for what they promise!”

We now owe over $22.5 trillion to lenders, of which nearly half are off-shore (China $1.11 trillion). At the rate which we are selling treasury notes, the deficit will balloon to $24 trillion by 2020.

That means when the presidential election rolls around next year, each taxpayer’s share of the debt will be $183,000 if nothing is done and if politicians keep their campaign promises.

During the 2016 presidential campaign, Donald Trump promised he would eliminate the nation’s debt in eight years. “Instead, his budgets would add $9.1 trillion during that time,” veteran analyst Kimberly Amadeo, reported in The Balance last month.

Meanwhile, Democrat presidential hopefuls—Elizabeth Warren, Cory Booker, Kamala Harris, Julián Castro, Pete Buttigieg and Joe Biden—seem to be in a bidding war promising as much as $10 trillion in new federal spending just to get rid of fossil fuels.

The Peter Peterson Foundation, which focused on putting our nation on a more sustainable footing during the 2016 presidential elections, says time is running out. The longer elected officials push it under the carpet, the larger the problem becomes. Unfortunately, Pederson’s warnings today are just faint murmurs in the wilderness.

According to Peterson: “The non-partisan Congressional Budget Office (CBO) projects the national debt could rise to as much as 175 percent of gross domestic product (GDP) by 2040. That level of debt would far exceed the historical average of approximately 40 percent debt to GDP.”

Translated that means a rapidly escalating portion of our tax dollars will go to interest payments unless the next president and Congress acts to bring borrowing and spending under control.

“By 2023, CBO projects that interest costs alone could exceed what the federal government has historically spent on R&D, nondefense infrastructure, and education combined. By 2050, they could be more than three times historical spending on those investments, as a share of GDP.”

The problem grows over time because six out of every 10 tax dollars goes to paying for entitlements, most notably Social Security and Medicare. Entitlement spending increases as more people retire and life expectancies are greater.

Compounding the problem is fewer workers are paying Social Security taxes. For example, in 1950 there were 16 workers for every Social Security recipient. By 2011, it dropped to three and is expected to go to two by 2030.

CBO projects that health care spending by all sectors of the economy — government, business, and consumers — will climb to 25 percent of GDP by 2040.

Maintaining economic prosperity and fostering a climate of job growth is important. Taxes must be affordable. Individual income taxes are nearly half of the federal government revenue stream. Social Security and Medicare taxes add another 33 percent. Government revenues rise as employment grows and our economy prospers.

The last real bipartisan attempt to put our government of a sustainable path came in 2010 when former Sen. Alan Simpson (R-Wyoming) and Erskine Bowles, former White House Chief of Staff under Bill Clinton, were assigned to develop solutions. Everything was on the table including a combination of taxes, economic growth and spending policies; however, they learned quickly there are no silver bullets. While taxpayers and politicians supported the approach, they balked at the painfulness of the recommendations.

Simply, this election voters need to ask candidates how they will pay for what they promise. There will be push back, but dodging the financial impacts is an injustice to our grandchildren who will pay the bill.

Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.


Talk to us

Please share your story tips by emailing editor@courierherald.com.

To share your opinion for publication, submit a letter through our website https://www.courierherald.com/submit-letter/. Include your name, address and daytime phone number. (We’ll only publish your name and hometown.) Please keep letters to 500 words or less.

More in Business

New Emerald Queen Casino in Tacoma to open June 8

$400M, 310,000-square-foot facility will open with COVID-19 precautions

A brighter future for papermakers | Brunell

COVID-19 had a surprising effect on locally-manufactured paper products.

Like similar businesses across King, Snohomish and Pierce counties, Bothell restaurant Hana Sushi closed due to public-health concerns. Sound Publishing file photo
Inslee changes course, says diners won’t have to sign in

Restaurants may still ask customers for information that contact tracers could use to stop an outbreak.

Coronavirus, work must coexist | Don Brunell

A cure isn’t available, but we can’t stay shut down.

Businesses, nonprofits asked to participate in COVID-19 impact survey

Regional effort in King, Snohomish and Pierce counties

Unemployment payments provide necessary cushions for jobless Americans | Don Brunell

The numbers you read on the news are likely lower than the true impact.

NASA selects Kent-based Blue Origin to help return humans to the Moon

Goal to land the first woman and next man on the surface by 2024

Construction worker installs siding to a building in Snoqualmie. File photo
Inslee gives construction a green light

It was unclear when sites would re-open, but employees will have to have PPE and stay six feet apart.

Report shows severity of COVID-19 impacts on hotels nationwide

70% of employees laid off or furloughed, eight in 10 hotel rooms empty

Green River College offers free webinar for local businesses

The online presentation will go over how to access various federal loans and business basics that will help you weather the pandemic