Even the most spendthrift progressives should be alarmed by the latest headlines on the nation’s rapidly rising tide of red ink: In October, the first month of the new fiscal year, the US budget hit a whopping $134 billion — fully 34% higher than during the previous October.
Outlays for the month ran to $380 billion, an 8% spike, year over year. The increases went to cover higher military spending, health care and Social Security costs.
Revenue, meanwhile, fell 3%, to $246 billion, though the Treasury tied most of that decline to a shift in the timing of certain payments.
It wasn’t just one quirky month, either: Last year, Uncle Sam laid out nearly $1 trillion more than he took in revenue. The federal government’s expected to pass that mark this year — and every year for at least the next decade.
Think about that: $10 trillion — more than $31,250 in new IOUs for every man, woman and child — over the next 10 years. And that’s on top of the nation’s current outstanding public debt, which just topped $23 trillion ($71,875 for every American).
Sure, debt can be rolled over, refinanced, expanded — assuming lenders continue to believe they’ll be repaid. Then again, if the hole grows too deep, that confidence may start erode. In 1974, national debt was 31% of the year’s gross domestic product; today it’s well over 100% of GDP.
Meanwhile, payments on those outstanding sums (with interest, of course) become a huge part of the annual budget: In October, debt-financing costs came to $33 billion, accounting for about a quarter of the entire month’s deficit.
You can try to blame President Trump’s tax cuts — but they’ve led to a strong economy that grew federal revenue 4% last year, more than double inflation. Yet spending went through the roof, ending 8% over the previous year.
Among the biggest culprits on the spending side? Entitlements, like Social Security and Medicare. They’re also the scariest, because they’re also deep in the hole, and their day of reckoning isn’t far off.
Social Security, with an unfunded liability over the next 75 years of $13.9 trillion, is estimated to run out of reserves in 2034. Medicare faces a $37 trillion, 75-year nut, with the hospital insurance fund on course to run dry in just seven years.
Guaranteed retirement benefits grow more expensive as people live longer. Meanwhile, falling US birth rates leave each worker supporting more and more retirees.
As economist John Phelan recently noted, “In 1946, the burden of one retiree was shared between 42 workers”; today it’s roughly three workers per, and by 2030 it’ll be just two. “A working couple will have to support not only themselves and their family but also someone outside the family thanks to Social Security and Medicare.”
As a result, taxes will have to go up sharply for tomorrow’s workers or benefits cut for retirees — or both.
No one will be happy — but the sooner America starts confronting the issue, the less the pain.