Selwyn Duke
For decades, there would be much talk among politicians about United States budget deficits (and the national debt). Yet this faded sometime after 2010, at the latest, after which our debt achieved elephant-in-the-room status. It’s perhaps just too scary or inconvenient — when you want or are promising free stuff — to discuss. Regardless, what just happened is discussion-worthy. To wit:
U.S. public debt has reached 100 percent of GDP for just the second time (first was during the Covid pandemic) since the WWII-era. We’re now in league with debtor nations such as Greece, Italy, France, and Canada.
Fox News reported on the story recently, writing:
The national debt held by the public reached $31.27 trillion as of March 31, while nominal gross domestic product (GDP) was estimated at $31.22 trillion for the 12-month period ending in March.
That pushed the debt held by the public as a percentage of GDP above 100%, meaning that the public debt is now larger than the size of the U.S. economy. Public debt as a share of GDP is a measure preferred by economists in assessing a country’s government debt burden because it excludes debt held in government accounts.
With the latest data showing the public debt eclipsing the size of the U.S. economy, the federal government is quickly approaching the all-time record debt to GDP percentage of 106%, which was set in 1946 as the U.S. was in the process of demobilizing after the end of World War II.
The nonpartisan Congressional Budget Office (CBO) released a 10-year budget and economic outlook earlier this year that projected the U.S. will break the post-WWII record in 2030 with the debt held by the public estimated at 108% that year. A decade from now, debt held by the public as a share of GDP is projected to reach 120%.
Making the budget picture even worse, the CBO estimates that the debt held by the public is expected to grow faster than U.S. GDP as projected in the years ahead, which could have far-reaching implications for the nation’s fiscal and economic outlook.
Regarding these implications, the Committee for a Responsible Federal Budget explained April 30:
The higher we allow our debt to grow, the more we erode our own prosperity and that of future generations. Rising debt compromises affordability by slowing income growth, pushing up interest rates, and increasing inflationary pressures. Debt squeezes our budgets with massive interest costs. It exposes us needlessly to challenges from geopolitical rivals. And without corrective action, rising debt could spark a devastating fiscal crisis.
What’s more, the United States’ unfunded liabilities — projected obligations (e.g., Social Security) minus projected revenue — are now $88.4 trillion. (This is more than twice our $39 trillion national debt. Note, too, that some unfunded-liability estimates are higher still.) This is, of course, much as if I owe you $1 million but my projected future earnings are only $400,000. You’d be right to assume you’ll never see most or even all of that money.
