Letter to the Editor of our local Newspaper
February 1, 2020
Dear Editor HDT:
I read with considerable interest your reprinting of the editorial from the Adirondack Daily Enterprise (N.Y.) in the January 19, 2020 edition of the HDT. The title of this editorial was “National debt growth is not sustainable.”
All of the statistics cited are true and alarming. However, the situation is even more dire than represented. I would title my concern: “The accelerating growth in national debt and future obligations are out of control.”
One significant measure that we should be tracking is the debt to GDP (Gross Domestic Product) ratio. In 1981 that ratio stood at 31%. Today that same ratio is approaching 107% an increase of almost 3 ½ times in less than 40 years. Our ability to pay what we owe must come from GDP. Our country’s financial condition is highly leveraged and, therefore, more at risk. The trend in increased deficit spending has been consistent, regardless of which political party has been in control.
It is important to note that there is a difference between the “official” national deficit and the “actual” deficit. Currently, the official annual projected deficit for 2020 is reported at $1.052 trillion, but the actual figure is close to $1.3 trillion. Budget elements for “classified” projects, waste, abuse, and fraud are not included in the most commonly reported number.
Where have the fiscal conservatives gone? We used to be able to count on the GOP to keep spending under control. The approved budget in 2019 has resulted in more than a $1 trillion annual deficit while the country is experiencing a decent increase in GDP, currently projected at 2.1% for 2020. We had large deficits in the past, but usually only when the economy was in recession. What is happening in 2019 is unprecedented. The economy was in ok shape before 2016, averaging a growth rate slightly over 2 %. The deficit-financed tax cut increased the growth rate to a bit over 3%, but that was merely a short-term tactic. The impact on the deficit will last for at least another ten years. The rate of growth in the economy is returning to the level of several years before 2016, and some economists are predicting a further slowdown. The growth rate for the 2nd quarter of 2019 was 2.1%, and it was 1.9% in the 3rd quarter.
Almost none of our elected representatives are willing to address this issue. We continue to approve budgets with no regard to the source of income. I am not opposed to a budget deficit. But when our National Debt exceeds our annual GDP, I think it is past time to cut spending, especially while the economy is still reasonably robust.
While the accelerating deficit is alarming, the level of unfunded liabilities is atrocious. Unfunded liabilities are “future” spending commitments that have no revenues targeted to offset these obligations. According to the Treasury Department, total U.S. unfunded liability includes Social Security (along with Medicare Parts A, B, and D), federal debt held by the public, plus federal employee and veteran benefits. This number currently exceeds $122 trillion and is also accelerating. It amounts to over $1 million per family.
What this means is that future generations are facing a bleak economic outlook. We have been approving future obligations is the short term without any concern for the longer-term consequences. It seems like our attitude is to take care of ourselves today and leave it to our descendants to take care of the debt we have created. Does this seem fair to you?
There are reasonable solutions to balancing the Federal budget, but they will impact several industry segments that are reaping significant profits from our spending habits. The amount of political funding provided by these special interest groups will be difficult to combat. I doubt that our current government representation dares to address this issue. My opinion is that we need stricter, effective and enforceable campaign spending limits and senate and congressional term limits. If career politics were replaced by service to the country then our financial condition would improve. It is important to remember that controlling the current budget is only a start. We must also begin to take responsibility for future spending commitments and ensure that there are income sources to meet these obligations.