Congress is dangerously short on dollars and sense

Members of Congress should be pleased that they don’t work in the private sector. If they did, many of them would have already been fired and possibly investigated by federal regulators for their financial malfeasance. Don’t take this as a partisan statement endorsing one party or presidential candidate over the other. Over the past couple decades, feds of all political persuasions have put the United States on a dangerous trajectory that—if not reversed soon—will lead to ruin.

The Congressional Budget Office recently released a bleak report demonstrating America’s acute financial troubles. “The budget deficit in 2024 is projected to be $1.9 trillion, up from a forecast earlier this year of $1.6 trillion,” wrote the New York Times. “Over the next 10 years, the annual deficit is projected to swell to $2.9 trillion by 2034. As a share of the economy, debt held by the public in 2034 will be 122 percent of gross domestic product, up from 99 percent in 2024.”

The national debt currently stands at around $35 trillion, which equates to around $100,000 per person living in the U.S., and by 2034, it is on track to reach $56 trillion. Our debt is not only unsustainable, but it is increasing at a rapid rate, which is a terrifying reality.

So how did we get here? It’s not particularly hard to pinpoint the cause. Lawmakers are democratically elected and feel compelled to take actions popular enough to ensure their reelection, and spending more and taxing less is pretty darn popular. Unfortunately, as anyone who has ever balanced a budget knows, this isn’t a recipe for success, but rather mounting debt. That may, in part, explain why the feds haven’t balanced a budget since 2001.

Since then, America has been borrowing at a dizzying pace by issuing Treasury Bonds. Myriad private investment institutions hold that debt, but foreign countries also hold a fair amount of it. In fact, China—whom we are told is our adversary—is America’s second largest foreign creditor. Generally speaking, U.S. Treasury Bonds have been considered a safe play for investors, but repaying debt is fast becoming a millstone around taxpayers’ necks.

Our debt interest payments alone are around $1 trillion a year, which is more than Congress had budgeted for our country’s defense and Medicaid. As Congress keeps borrowing, interest payments could even eclipse Social Security. So as debt explodes, we could conceivably reach a point in which Congress has to decide whether to continue sending grandma her Social Security checks, fully funding the military or doing the unthinkable: defaulting on our debt.

Our financial mess could have been avoided had policymakers made more prudent decisions or adopted a balanced budget amendment. Members of Congress regularly introduce legislation to do so, but despite their intentions, the measures have little-to-no chance of passage. The closest Congress ever came was in 1982 when then-President Ronald Reagan endorsed a balanced budget amendment and in 1995, but the measures fell just short.

An amendment to keep federal spending in line with its revenue seems like a reasonable approach to correct Congress’ gross negligence. Most states run balanced budgets. Georgia has even enjoyed surpluses for years. If states can do it, then the feds should be able to figure it out too. However, opponents of a balanced budget amendment claim that it would bind the government’s hands in a way that could prove dangerous. Oh really, and running a debt that may soon reach $56 trillion isn’t dangerous?

This aside, you are now more likely to hear about Modern Monetary Theory in some congressional circles. It is a “macroeconomic model positing that countries that issue their own currencies, such as the U.S., are not constrained in their spending,” writes Investopedia. “Proponents of [Modern Monetary Theory] argue that such countries can’t default on the securities they issue, as they can simply print or issue more currency.” So you can print and spend all of the money you want and not have to worry, according to this backward theory. If there were any truth to it, then there would be no reason to collect taxes.

The path forward isn’t particularly complex in theory. Tax more, spend less, or some combination thereof. None of these are particularly popular decisions, which means lawmakers will probably continue to kick the can down the road to our detriment. It’s hard to be the independent leader of the free world, when you’re a slave to debt, and it’s hard for Americans to thrive when Congress has historically made perilously short-sighted decisions. So long as officials remain out of the private sector, they are unfortunately free to continue piloting a financial nosedive.