Let’s stop mortgaging our children’s future

Runaway national debt is both morally and financially bankrupt. It saddles the future with our present problems and leaves our federal government less ready than ever to meet the unpredictable needs of the day. We should always take every opportunity we can to set our fiscal house in order, and the looming debt limit is one of the best opportunities available for achieving that.

Created in 1917, the debt limit was enacted in order to empower Congress to keep the federal budget under control. That year, the annual deficit (spending in excess of revenues) was less than a billion dollars and the ceiling on debt was capped at $11.5 billion. Today, annual deficits regularly run in excess of one trillion dollars and the federal debt (the accumulation of all of the previous deficits) is capped at $31.4 trillion. If our entire gross domestic product were taxed at 100 percent and every government program cancelled, we would still be hard pressed to pay off all our debt.

According to the Treasury Department, the government could run afoul of the debt ceiling as soon as June 1st, resulting in a default as the government is no longer able to make all of its payments on time. In 2011, the United States saw its credit rating downgraded for inching just a few days away from a similar deadline.

The vast majority of our debt comes from entitlement programs like Social Security and Medicare, which make up more than 70 percent of our national budget. Despite the payroll taxes American workers pay into these safety net programs, they’re poorly designed to meet the demographic situation of our country. With more than 70 million Baby Boomers set to retire by 2030, the trust funds supporting these programs will quickly enter insolvency.

The Congressional Budget Office predicts that the national debt will quintuple over the next 30 years, as Social Security and Medicare tally up $116 trillion in losses. While some progressives irresponsibly deny that debt matters, the interest alone that we have to pay on the debt will quickly reach crippling levels. Right now, a modest eight percent of federal revenue goes to paying interest on the debt. But by 2050, debt interest will easily grow to half of all federal revenue. And if the Federal Reserve cannot tame inflation, economist Brian Riedl warns that those debt interest payments could swell to consume every dollar we bring in.

Congressional Republicans are asking President Biden to make substantive spending and budget reforms. If debt interest payments grow to trillions of dollars a year, it will be too late, and we won’t be able to fund our national defense, let alone programs for the vulnerable and retirees. Eventually, the levy of debt financing will break, and even China, which holds nearly $1 trillion of U.S. debt, will lose interest in buying more.

The House of Representatives passed legislation that would increase the debt limit by $1.5 trillion in exchange for reducing deficits by $4.8 trillion. While further entitlement reform is necessary for long-term financial security, the House has provided Biden a serious proposal to consider.

So far, Biden has refused to cooperate. Rather than engage budget reform on the merits, the president has recast the looming debt limit as a false dilemma between raising the limit without any reforms or defaulting on our debt obligations. While default would be a disaster (fast-tracking the debt interest nightmare scenario detailed above), there is no reason why Biden shouldn’t come to the negotiating table, as even a growing number among his own party is urging. The president doesn’t have to agree with every jot and tittle of the Republican-passed plan, but he will need to propose a serious alternative of his own in order to set the federal budget back on a sounder trajectory.

As the last hundred years of economic history plainly attests, the debt limit isn’t a guarantee that budget reform will actually happen. But every so often, deliberation over the debt limit provides an opportunity to get things right. An explicit vote on raising the debt ceiling can sometimes force lawmakers of both parties to demonstrate the fiscal responsibility they should have exercised all along.

While there are many good causes the federal government can fund to “promote the general welfare,” like safety net programs, none are so important as to justify piling inescapable debt upon the next generation. As the moral philosopher John Médaille admonishes us: “Financing the present by mortgaging the future is not only bad economics, it is bad morals; we pay for our profligacy by burdening our children, thereby reversing the natural order of family and national life.”

Good parents don’t dump their problems on their children. We are meant to leave future generations an inheritance, not a debt crisis.