This report confirms that our national debt is unsustainable and politicians can no longer ignore it

Originally published at Rare

In an election cycle dominated by talk of Donald Trump’s yuge wall, it seems the last thing on many voters’ minds is fiscal responsibility.

Yet whether or not our national debt is at the forefront of political discussion, the federal gravy train chugs on and the consequences pile up. Unfortunately, the situation is bad enough that it’s not just staunch budget hawks concerned about the fiscal cliff the U.S. is careening toward.

Writing at the Wall Street Journal, David Wessel of the Brookings Institution – hardly a bastion of right-wing extremism – said, “[T]he trajectory of the debt is worrisome for one inescapable reason: When you owe a lot of money and interest rates rise, your interest tab mounts.” As he explained, current interest payments on our $19 trillion-and-counting national debt amount to slightly more than 6% of federal expenditures.

And while 6 percent isn’t an eye-popping number on its face, bigger trouble is brewing on the horizon. As Wessel explained:

“[The] latest Congressional Budget Office [CBO] baseline projections suggest that, without new tax or spending legislation, interest will account for more than 13 percent of all federal outlays in 2026.”

This will occur in part, says Wessel, because interest rates, which have been kept artificially low for some time as a result of Federal Reserve policy, are expected to rise in the future.

“CBO expects the average yield on 10-year Treasury notes, now around 1.9%, to climb to 4.1% over the next decade,” he noted. “There will also be more debt on which to pay interest because the government will be borrowing each year to cover the deficit.”

This is a problem because, as Wessel noted, “The federal debt … is huge by historical standards: bigger as a share of the economy than at any time in U.S. history except for World War II.”

But post-World War II, after an obviously chaotic period, the government did manage to get its act together as far as spending was concerned.

“In 1944, government spending at all levels accounted for 55 percent of gross domestic product (GDP),” wrote The Mercatus Center’s Cecil Bohanon. “By 1947, government spending had dropped 75 percent in real terms, or from 55 percent of GDP to just over 16 percent of GDP.”

Today, the political will to enact reforms that would yield a similar outcome appears to be severely lacking.

What does this all mean for the future?

As Wessel explained, “Congress and the president … or his successor … could raise taxes or cut spending. That would mean less debt and thus lower interest payments.”

That could work, right? Not so fast.

“[T]he latest CBO scoring of President Obama’s budget suggests that even if Congress accepts each of his tax and spending proposals, interest in 2026 still would account for 12% of federal spending.”


“That’s a lot of money,” added Wessel. “[M]ore than the White House projects for annually appropriated spending in 2026 by all government agencies combined outside of the Pentagon.”

Talk about unsustainable! And the way this presidential election is going, it’s difficult to believe the next occupant of the White House will prioritize balancing the budget.

Sadly, like much about the current state of politics, this is liable to make a fiscal conservative miss Senator Rand Paul’s contribution to the presidential discourse. Paul, and to his credit, Ohio Governor John Kasich, have truly been the only two candidates this cycle to focus on balancing the federal budget.

Paul is fond of saying, “The greatest threat to our national security is our debt.” The Congressional Budget Office is, if indirectly, acknowledging this point. When debt payments crowd out other priorities, national security, along with countless other functions, could also be crowded out.

It’s time for Washington politicians to heed this CBO report, harness their latent common sense, and get serious on spending. Our nation’s future depends on it.

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