We cannot go on spending as we have been doing under both Democratic and Republican administrations. Under Bill Clinton, the national debt increased by $1.5 trillion. Under George W. Bush, it exploded by almost $5 trillion. The administration of Barack Obama almost doubled the national debt to more than $20 trillion. Under Donald Trump, the deficit hit $700 billion during his first year in office and is projected to be $800 billion in 2018, with about $1 trillion per year for the future.
Compared to GDP, our national debt is the highest it has ever been in our history, with the exception of the immediate aftermath of World War II. We currently spend over 6% of our federal budget on interest expense, even with interest rates are at historical low rates. When – not if – interest rates rise, this burden will become unbearable.
We used to borrow for the future. Now we borrow from the future. The debt load is over $64,000 for each man, woman and child in the United States. More relevantly, it is over $100,000 for each person below the age of 45. The national debt is a tax on our children and our grandchildren. If “taxation without representation” once caused a revolt in this country, our offspring should be revolting now.
Although tax cuts have contributed to the debt, the biggest factor has been spending. Federal Government receipts compared to GDP have fluctuated with the business cycle, but have been in the same range since the 1950s. Conversely, Federal Government expenditures compared to GDP have been steadily increasing. With the growth of entitlement spending, this difference will certainly increase – unless we do something about it!
We must drastically cut expenditures if we are to get our debt under control. We can start with the military, the cost of which can be sharply reduced once we decide to vigorously defend the United States but not police the world [include cross reference]. We can also eliminate agricultural subsidies over a period of time. Housing subsidies should also stop – among other things, these go heavily to areas where government restrictions on supply artificially raise prices, in a classic example of one bad government policy creating the need for another one. The Department of Education should be also be eliminated, saving billions. Federal programs for energy, science and the arts are all unnecessary. The list of spending cuts in these discretionary areas goes on.
However, no attempt to control government expenditures can be serious unless it addresses entitlement spending. Entitlements – primarily Social Security, Medicare and Medicaid, but also including the Veterans Administration, pensions and other social programs – are bankrupting the country.
These programs already consume 65% of the Federal budget. Within 10 years, they are projected to consume 100% of all Federal revenue, meaning that everything else will have to be paid for with additional taxes or borrowings. The Social Security Trust Fund, which is nothing more than an accounting fiction, will be exhausted by 2034 and the program has a total projected deficit of $30 trillion. Medicare is even worse: it has a projected deficit of $40 trillion. This combined deficit of $70 trillion equals almost four times the size of our economy.
It is clear that no serious reform of our large and growing debt problem can ignore entitlements.
Yet, neither the Republicans nor the Democrats will address this issue. President Trump promised not to touch Social Security and Medicare in his 2016 campaign. The two leading Democratic candidates, Hillary Clinton and Bernie Sanders, wanted to expand them.
Many older people have relied on the government’s promises for their retirement. We cannot suddenly pull the rug out from beneath their feet. But we can make small adjustments that will generate material savings while maintaining our basic commitments. And we can progressively wean younger people from the system so that they can begin to save for their own retirement.
For those approaching retirement, we can means-test Social Security benefits for the wealthy and index payments to the cost of living and not wages. For those with longer to retirement, we can make these changes and progressively increase the retirement age. For the young, we can reduce Social Security and its taxes, to be replaced by personal savings.
We will never be able to achieve perfect intergenerational justice as we unwind the Social Security system. However, we have no choice. The system is clearly unsustainable in its current form. The longer we wait, the greater the injustices will have to be.
For Medicare and Medicaid, the primary driver of deficits is the exorbitant cost of healthcare in America. If we fix the problems in healthcare, in line with my proposals [link to healthcare issue], then the problems with these programs can also be largely addressed.
There is no greater challenge facing our nation than our exploding national debt. The Libertarian Party is the only one willing to discuss these problems honestly and to meet them head on.