Annual budget deficits must end, and the debt must be reduced

May 30, 2023

The National Debt is a monstrous cloud hanging over the United States. It is money owed that is not being repaid, but growing each year.

As of May 25, the National Debt stood at $31,800,000,000,000 ($31.8 trillion). That is a number so huge that it is difficult to understand.

The U.S. Census Bureau tells us that as of July 1, 2022 there were 333,287,557 U.S. citizens. That means that for each citizen — man, woman and child — there is about $94.00 of debt, and about $430.00 per person 18 years-old and older.

Having a National Debt is not new. Its history is a fascinating thing to study.

There was a National Debt when President George Washington, took office in 1789. It was slightly more than $71 million. And, it increased by 11 million during his term that ended in 1797. 

Most of our presidents have seen the Debt increase during their terms in office, although 12 had a decrease in the Debt when they left office: Thomas Jefferson in 1809; James Monroe in 1825; John Adams in 1829; Andrew Jackson in 1837; Millard Fillmore in 1853; Franklin Pierce in 1857; Andrew Johnson in 1869; Ulysses S. Grant in 1877; Rutherford B Hayes in 1881; Chester Arthur in 1885; Grover Cleveland in 1889; Benjamin Harrison in 1893; Warren Harding in 1923; and Calvin Coolidge in 1929. 

Two presidents saw no change. James Garfield was assassinated during his first term after only 200 days in office. And after only 31 days in office, William Henry Harrison died.

It has been more than 90 years since the Debt was lowered under Coolidge. The reduction was $5.4 trillion for a total Debt of $16.9 trillion, slightly more than half of today’s Debt.

Since then, every president — 16 of them — has seen an increase during their time in office.

While things that a president does can affect the Debt, sometimes things beyond his control cause an increase. Factors like wars, recessions and national crises can affect the Debt. A recent crisis was the Covid pandemic. Another was the 9-11 attacks on the Twin Towers and the Pentagon that led to spending that was not planned.

Also, because the U.S. fiscal year begins in October and ends the following September, and presidents take office on January 21, during most of a president’s first year in office, he is at the mercy of his predecessor’s budget.

The Debt Ceiling is the limit on borrowing that can be done, and Congress has control of it. It is part of a law (Title 31 USC, section 3101) that sets a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury. 

When the debt ceiling is reached, as it often is, these days, the President and Congress must work toward an agreement on raising it. If they succeed, the government can borrow more money to meet its obligations. If not, a government shutdown occurs until an agreement is reached. The latter option is not really a viable one.

For the last nine decades the National Debt has continued to rise.  The smallest increases since Coolidge’s lowering of the Debt in 1929 are from three consecutive presidents who served from 1981 to 2001: Ronald Reagan at $1.86 trillion; George H.W. Bush at $1.55 trillion; and Bill Clinton at $1.4 trillion.

Since Clinton’s tenure, the next three presidents have seen larger increases: George W. Bush at $6.1 trillion; Barack Obama at $8.3 trillion, and Donald Trump at $8.2 trillion. Joseph Biden has seen the Debt increase by $2.5 trillion in his two-plus years in office.

In December of 2022, interest on the National Debt — which at that time was $31.4 trillion — was $210 billion, roughly 15 percent of total government spending for the year, according to Visual Capitalist online.

“The current revenue of the federal government is approximately $4.6 trillion while spending exceeds $6.0 trillion,” Forbes online reported in April. “Thus, the current budget deficit is over $1.4 trillion. It’s clear that members of Congress are spending like drunken sailors and like the Titanic, the U.S. is on a collision course with a financial iceberg.” 

The article goes on to say that high interest rates make this situation worse for the government to meet its financial obligations. Meanwhile, politicians seeking reelection prefer to keep spending.

The Republican-led House of Representatives passed a measure to raise the Debt Ceiling, but also to make significant spending cuts. Speaker Kevin McCarthy, R-CA, and President Joe Biden have been meeting trying to reach an agreement.

Hopefully, by the time this column is published, an agreement will have been reached.

At some point, elected members of Congress and the President of the United States must recognize that this unconscionable spending must stop, and the country must trim down, and develop a budget that pays current obligations and begins to pay down this humongous debt.

Our country was designed to be small, efficient, and non-intrusive. A government that protects the freedoms of its people, would not intrude on their good lives, and would not grow into the gargantuan monstrosity it has become. That is what the government needs to again become.

The scare mongering continues on the debt ceiling and default

There is great wailing and gnashing of teeth over the potential for catastrophe if the debt ceiling is not raised, but whether the ceiling is raised or not, the underlying problem will remain to be reckoned with yet again.

We are warned against defaulting on the national debt, which President Barack Obama tells us will have the most dire consequences. However, default really isn’t an issue, as economist and former long-time Federal Reserve System Chairman Alan Greenspan explained: “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”

While Mr. Greenspan’s statement is technically true, printing even more money to pay the nation’s debts has its own set of economic problems, and heaven knows we have enough of those already.

Another reason paying our debt service isn’t a problem is that even if the debt ceiling isn’t raised so that the government can borrow more money, there is more than enough money coming into the treasury each month to pay the interest on the debt multiple times over, although that has its problems, too.

But the best reason is contained in Section Four of the Fourteenth Amendment to the U.S. Constitution, which directs, in no uncertain terms, that "the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." The Constitution commands the president to make good the debts of the United States, and that includes both what our nation owes to bondholders, and the sums promised in legislation to those receiving pensions set by law, according to legal scholar Garrett Epps.

What that means is that if the debt ceiling isn’t raised President Obama will be forced to make some tough decisions on what won’t receive funding so those mandated payments can be made, and since much of Mr. Obama’s popularity comes from spending money, there could be some uncomfortable and long days in the White House.

However, the scare mongering about the catastrophe facing the nation and the resulting public outrage will likely force an increase in the debt ceiling for the 80th time since 1940.

President Obama tells us this won’t increase spending, but since it does increase the limit on spending, does anyone really doubt that spending will soon increase, and before long the politicians will want yet another debt ceiling increase.

Sometimes there are compelling reasons for deficit spending, like WWII, the 9-11 attacks, and the banking crisis that threw the country’s economic system into crisis, but most times it is just a bail out from fiscal irresponsibility. Sometimes the ceiling has been raised by a small amount, other times by a large amount, and sometimes it’s been raised temporarily with provisions for a "snap-back" to a lower level.

“Weighing benefits against costs is the way most people make decisions – and the way most businesses make decisions if they want to stay in business,” says the eminent economist Dr. Thomas Sowell. “Only in government is any benefit, however small, considered to be worth any cost, however large.”

And that is the crux of the problem. People who are elected to represent the interests of the citizenry do not use common sense and basic economics when making decisions we pay them to make.

Trying to obtain benefits without considering either the cost or the likelihood of success not infrequently produces bad programs, and bad programs breed and multiply in Washington, DC, and live forever.

The federal government is simply too big, too powerful, too intrusive, too expensive, and too undisciplined, and as a result there are dozens of duplicate programs, and more than a few programs that do not, and never have, achieved success, but are still being funded. And there are billions going to fraud and abuse.

Attempts to reign in waste, fraud and abuse have mostly lacked serious action, and efforts to cut spending to match income likewise have accomplished little.

And atop that lackluster record we have the biggest deficit producer in history in the White House.

At the end of FY2000, four months before George W. Bush took office, the national debt totaled $5.67 trillion. At the end of the fiscal year that Barack Obama took office it had risen to $11.91 trillion. That number is skewed higher due to the $151 billion TARP program President Bush implemented, $147 billion of which was repaid after Mr. Obama took office.

At the end of FY2013 the debt stood just short of $17 trillion. Excluding FY2009, when both Mr. Bush and Mr. Obama held the White House, the president and the mostly-Democrat-controlled Congress added more than $5 trillion to the national debt, with average deficits of $1.163 trillion from FY2010 – FY2013.

It is way past time that government face up to reality and live within its means. The president and Congress must get rid of unproductive programs; eliminate, or at least significantly reduce, fraud, waste and abuse; shut down or downsize federal departments; and implement business-like fiscal standards. In short: do their job.