WILFORD: Democrats Continue To Misplace Blame For Debt Crisis

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Andrew Wilford Contributor
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Yet again, the richest country in the world finds itself unable to abide by the most meager of fiscal constraints — the debt ceiling. More of a “debt retractable roof,” the debt ceiling is the limit of what the federal government is authorized by Congress to borrow in order to meet its fiscal obligations. In the past, Congress has simply solved the problem of running up against this ceiling by increasing it. But while “raising the roof” may be good advice in a club, raising the debt ceiling while totally ignoring the underlying drivers of debt is proving to be an unsustainable and irresponsible path forward. Default should not be an option, but neither can Congress continue to pretend that we can continue to spend with impunity.

A course correction is made far more difficult by the fact that progressives are again making a concerted effort to obfuscate the causes of our national debt crisis. In a recent Boston Globe op-ed, Sen. Elizabeth Warren presented our current fiscal crisis as a result of undertaxing Americans and the 2017 tax reform law. But the numbers don’t back that up

The last year the federal government spent less than it took in was in 2001, when spending was $1.86 trillion and revenues were $1.99 trillion. As of last year, even with pandemic emergency spending winding down, spending is still almost triple that number at $5.8 trillion. Revenues have increased drastically as well, just not quite as fast ($4.8 trillion).

Speaking of pandemic spending, while there are more permanent structural issues with our fiscal situation that we’ll get into in a moment, the pandemic made a bad set of circumstances far worse. Whereas before 2020 the federal government had a deficit of nearly a trillion dollars per year, in 2020 and 2021 annual deficits averaged nearly $3 trillion

That’s almost entirely a spending issue. Revenues declined from $3.46 trillion in 2019 to $3.42 trillion in 2020, but spending leapt from $4.4 trillion in 2019 to $6.6 trillion in 2020. And to be clear, some of that spending was necessary to get Americans through lockdowns. But even when the fiscal crisis had passed, Congress just kept on spending — from the inflationary American Rescue Plan Act to an infrastructure bill to the mis-named Inflation Reduction Act

In the face of that credit card spree, the 2017 tax reform law — Democrats’ favorite deficit scapegoat — seems far less significant. The Tax Cuts and Jobs Act (TCJA) had an estimated deficit impact of $1.4 trillion over ten years. That’s hardly nothing, to be sure, but the TCJA’s 10-year impact was eclipsed in just two years by the American Rescue Plan Act, a bill chock-full of boondoggles and bailout money to states that they didn’t need

Unfortunately, while our fiscal problems are bad enough now, the real crisis is down the road. As the costs of the major health care and retirement programs (Social Security, Medicare, Medicaid, CHIP, and Affordable Care Act) continue to increase, the weight of the national debt will only become more crushing.

This past year, the cost of those programs combined with the cost of just paying interest on the national debt cost taxpayers a little over $3 trillion. By 2044, the cost of those programs alone is set to eat up the entirety of federal revenue, costing taxpayers over $11 trillion per year. Three decades from now, that number will balloon to $17 trillion. And that would be before even considering other “discretionary” spending, including on things like national defense.

Even that dreary picture charitably assumes that Congress doesn’t do anything to increase deficits in that time, an almost absurdly optimistic assumption. Not only has Congress proven itself to be utterly incapable of fiscal restraint in the best of times, but it’s a certainty that Congress will need to spend on emergencies like recessions in the future. Every time Congress whips out the credit card, the timeline moves up.

So don’t let progressives tell you that we’re in the fiscal situation we’re in because we don’t tax enough. The problem is driven by the other side of the ledger.

Andrew Wilford is a senior policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax and fiscal policy research and education at all levels of government.

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