In the time it takes you to read this sentence, the national debt will have increased by almost $2 million. By the end of the hour, the national debt will have increased by almost $113 million; by the end of the day by over $2.7 billion.
In the aggregate, the federal government’s accumulating obligations are staggering. The total national debt exceeds $22 trillion. That’s larger than the entire Gross Domestic Product, and equal to more than $176,000 for every household in the country. And it’s close to four times the average national debt carried throughout our nation’s 243 year history.
In addition to the national debt, other federal obligations for unfunded entitlement programs like social Security and Medicare now total more than $95 trillion, an amount equal to more than $760,000 for every household in the country.
A recent report from Wall Street estimates that total federal government obligations of all kinds – including traditional debt instruments like bonds and notes, unfunded entitlement programs, intergovernmental borrowing, and public employee pensions and benefits – may actually exceed 1800 percent of our Gross Domestic Product.
We a driving into uncharted territory, with our real-time National Debt Clock clicking over like an odometer marking our relentless movement down the road toward fiscal perdition.
For years, economists have warned that our ever increasing debt burden will ultimately prove to be unsustainable. They have repeatedly advised that taxes must be raised and spending cut and entitlements reduced in some combination without delay before some unexpected economic dislocation precipitates a ruinous financial crisis.
Despite such warnings, most elected officials, Republicans and Democrats alike, have shown little interest in using cost containment or revenue enhancement to tame the debt. Some progressives have proposed higher taxes, but usually to justify even higher levels of spending.
Progressives also now seek to justify ever higher spending by referring to so-called Modern Monetary Theory. According to this theory, a government whose financial obligations are denominated in its own currency, like the United States, can expand its obligations without limit or consequence because its central bank can always simply print new money in whatever amounts are needed to meet the expanding obligations when they come due. Have a debt? Print the money. Presto!
“Modern” Monetary theory is really quite old. Down through the years, many governments have tried to print their way out of debt. Ultimately, none successfully avoided the deleterious economic consequences that always result from unsustainable debt. None.
So, what are we to do if too few will embrace the traditional tools of debt control and too many are prepared to embrace fallacious theories of public finance in order to minimize the threat that confronts us? There may, in fact, be another way to deal effectively with the government’s debts, one that does not require elected officials to enact politically unpopular and growth-retarding measures that raise taxes, cut spending, or reduce benefits. This alternative has been frequently discussed and sometimes implemented to a very limited extent, but it has never been fully embraced and implemented to an extent consistent with its great potential.
The federal government’s liabilities are certain