The U.S. Federal Debt Reaches Record High Levels
In March, the federal budget deficit hit $208.7 billion, which is a $32 billion spike from a year ago.
Last week, the Treasury Department reported that the deficit was 18.4% higher than a year ago.
“After President Donald Trump signed into law tax cuts, the Congressional Budget Office estimates this year’s deficit will hit $804 billion, up almost $140 billion from last year. The deficit is projected to reach $981 billion in 2019. It would then exceed $1 trillion for the foreseeable future,” writes USA Today. “Rising federal debt loads stemming from the $1.5 trillion worth of tax cuts over the next decade could provide a brief boost to economic growth, but the costs of servicing the debt could also be a drag on growth in the long term and possibly make it harder for the government to respond to an economic downturn.”
As The Washington Post reports, by 2028, it would cost the government over $80,000 per each U.S. resident to pay the total public debt. By 2020, the budget deficit is expected to top $1 trillion.
“Such high and rising debt would have serious negative consequences for the budget and the nation,” said Keith Hall, the director of the budget office. “In particular, the likelihood of a fiscal crisis in the United States would increase.”
“The government’s mounting debt has seemed of little consequence on Capitol Hill in recent months as Republicans in Congress passed a sweeping package of tax cuts. But in a sign that Republicans are growing concerned about the political liability of soaring deficits, the House will vote Thursday on a constitutional amendment to require balanced budgets,” writes The New York Times.
Democrats often cited the federal debt as an argument against the tax cuts, yet eight years of democratic party control and massive government spending attributed considerably to the increasing debt.
“To every House Democrat on social media today complaining about the debt and deficit for the first time: I look forward to seeing you vote for the balanced budget amendment later this week. That is of course assuming you are actually serious about addressing our debt,” said Rep. Jeff Duncan (R-SC.)
However, the House failed to advance the amendment, which would have stopped Congress from spending more than what the nation collects in revenue.
“The only way to ensure that Congress acts with fiscal restraint over the long term is to pass a balanced budget amendment,” said Judiciary Committee Chairman Rep. Bob Goodlatte (R-Va.) last Thursday.
Democrats called the bill hypocritical and a poor solution to the federal debt problem, especially since they argue that the GOP’s tax reform bill is expected to increase the debt.
“While it certainly is a disappointment that a Balanced Budget Amendment was blocked by Democrats, this cannot be the the end of our efforts to get America back on the right fiscal track,” said Rep. Mark Walker (R-N.C.) “With the recent $1.3 trillion budget-busting omnibus, we must renew our efforts to tackle the spending crisis.”
So what’s next?
Rep. Dave Brat (R-VA.) points out that Trump was pressured to sign the recent omnibus spending package to get the funding needed to rebuild the military and that there are trivial projects getting federal funding, including the Gateway Project to build a tunnel to connect New York and New Jersey, the $15 million being sent to china in “development aid,” and the funding for building border walls in Tunisia.
Brat says that a rescission may be the solution.
“Under the 1974 Impoundment Act, the president can propose the rescission or deferral of funds in any spending bill, and Congress will have 45 days of continuous session to either approve of those cuts or not. Even better, rescission only requires 51 votes in the Senate. Even if we have a few Republican defectors in the upper chamber, perhaps a handful of Democrats in red states can find fiscal sanity? After all, didn’t the Democrats (and their friends in the media) make a lot of noise about the $150 billion increase in deficit spending due to tax cuts? That was when the economic growth generated by our agenda would pay the tab. Now, when the deficit increase is $400 billion generated by increasing the spending swamp, we hear crickets,” writes The Washington Times.
Author’s note: Although the tax cut will lead to economic growth, this won’t fix the debt problem. As Brat explains, there are still projects that a getting federal funding that really shouldn’t be.