Opinion

RICHENDOLLAR: Biden’s Latest ‘Bankrupt America’ Gambit

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Uncle Sam spent the first three years of this decade on a COVID-induced spending binge that produced record deficits, more dependent Americans, and inflation rates straight out of the 1970s. But judging from Democrats’ intransigent tone in debt ceiling negotiations, fiscal sanity in D.C. is still dead as disco. On Thursday, America officially reached its debt ceiling of $31.5 trillion, and negotiations over raising the limit look ominous. 

In the face of a national debt that has roughly doubled from $16.4 trillion to $31.5 trillion in the one decade between the second Boehner-Obama debt ceiling fight in January 2013 and the brewing McCarthy-Biden one today, the Democratic Party’s official stance is to pretend there isn’t an issue. President Joe Biden called on Congress to raise the nation’s debt ceiling “without conditions.” C’mon, man. 

Since Biden’s old boss took the helm in January 2009, America’s national debt has exploded from approximately $10 trillion to over $30 trillion. More disturbingly, the growth of the national debt radically outpaced gross domestic product (GDP) growth (the value of all finished goods and services produced in the United States in a calendar year) over that period. Whereas our national debt was 68% of GDP in 2008, today, it stands at 123% and rising, with no realistic plan for reducing that ratio or even stopping its meteoric rise on the table from either major political party, especially as Treasury bonds daily reprice at higher interest rates upon maturity after a decade of ultra-low borrowing costs. 

Tax revenue, contrary to what our progressive friends insist, is not the problem. Uncle Sam is raking in over $4.5 trillion in tax revenue every year yet spends over $6 trillion. For perspective, in 2010, when the government ran a then-record $1.3 trillion deficit under President Obama’s administration, the federal government took in $2.2 trillion in revenue and spent approximately $3.5 trillion. If the U.S. government spent only what it did in 2010 (adjusted for inflation), we would have a balanced budget. But spending growth, particularly in entitlement programs and debt service payments, has radically outpaced record tax receipts. 

Since 2013, our debt has doubled despite the longest bull market in American economic history roughly coinciding with that decade. Though the $3 trillion-plus deficits of 2020 and 2021 are gone, even as COVID-19 spending winds down, Uncle Sam faces shortfalls of $1-1.5 trillion annually for as far as the eye can see. U.S. GDP would have to grow at an annualized 5-6% to keep pace. That hasn’t happened in five consecutive years at any time in the postwar era.

The most common retort to those who recognize the threat posed by federal overspending is an appeal to the status quo and America’s supposed invincibility. Because no U.S. Treasury bond auction has ever failed, some assume that one never will. Because no significant creditors of the United States have ever lost confidence in Uncle Sam’s “full faith and credit,” some assume that this will simply never happen, and that America can borrow indefinitely. America’s economy, the argument goes, is too unimaginably productive for our nation to ever have a debt crisis of the kind that rocked Latin America in the 1980s and 90s. 

But, as Ernest Hemingway wrote about personal bankruptcies and falling in love, national declines and credit crises happen in two ways: first gradually, then suddenly. America’s national debt is growing to unsustainable levels that threaten to constrain economic growth, burden future generations with higher taxes, and leave the United States without the geopolitical flexibility and leverage to remain the uncontested superpower in the face of an emerging Chinese rival.

Certainly, America cannot and should not default on its debts by failing to raise the debt ceiling in the next few months (before emergency measures by the Treasury Department to re-order payments and triage non-essential functions are no longer enough to keep entitlements funded and the interest on the debt paid). But America can ill afford to continue down its current unsustainable course. Our posterity deserves better.

In the coming weeks and months, the media will uniformly portray Republicans in the House as: obstructionists, killjoys, after your grandmother’s Social Security check, and even terrorists holding America’s full faith and credit hostage. Conservatives must show courage and true statesmanship in the face of the coming defamatory barrage. They must strike a deal that reduces our future deficits and constrains spending, gradually bringing the budget back into balance. The American people elected a Republican majority into the House of Representatives in no small part on economic concerns. As President Obama once said, elections have consequences. Let’s hope the consequences here include a little fiscal realism.

 

Nathan Richendollar is a summa cum laude economics and politics graduate of Washington and Lee University in Lexington, VA. He lives in Southwest Missouri, works in the financial sector, and has been published in the Daily Caller, Live Action, and Foundation for Economic Education.”

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.