I often ask myself whether we are doing enough to be good stewards for America’s future. How will future generations be impacted by the actions that our nation’s leaders and its citizens are taking today?
The Congressional Budget Office (CBO) report on the Budget and Economic Outlook for 2018 makes it clear that we are not doing enough. In fact, we are failing. We are leaving our children and grandchildren a financial burden that may soon become untenable.
{mosads}The CBO’s glimpse of America’s fiscal future is dismal: a national debt that balloons to $29 trillion by 2028, and that exceeds our nation’s gross domestic product (GDP) over the same period. The CBO also projects a return to trillion-dollar annual budgeted deficits as the new normal.
When one compares future annual defense spending with annual interest payments over the next 10 years, America’s future gets eroded even further. Given the recent actions of Congress, and the years of prior inaction in correcting our nation’s fiscal path, the U.S. government’s annual interest payment will supersede annual defense spending in only five years. By 2023, annual interest costs on the U.S. national debt will spike to $702 billion, while annual defense spending will reach $679 billion.
To put that into perspective, in the 2017 fiscal year, the U.S. government paid $263 billion in interest payments and spent $590 billion in defense.
Of course, there is a stark difference between interest and defense costs. Interest payments do not strengthen our national security; they do not pay our soldiers, and they do not lay the groundwork for the military technology of the future. In fact, interest costs indirectly do the opposite. The increase in interest costs for federal spending over the next decade could dramatically squeeze the funds that our national government has available for discretionary spending on important government programs.
{mossecondads}The key point here is that discretionary spending is already squeezed to less than a third of the budget by spending on mandatory entitlement programs.
And, it is defense spending that accounts for more than half of discretionary spending. Since interest also acts as a mandatory expense and must be paid currently, unless we begin to reform entitlement spending or increase taxes over the next 10 years, discretionary spending will increasingly become a hostage to rising interest costs on the national debt, including defense spending and the funds that we need for homeland security.
On our current path, one can almost guarantee that sometime in the next 15 years, the U.S. government will need to “write a check” for $1 trillion solely for the annual interest payment on our national debt. What will that mean for Americans who will have to face that reality, and for future leaders who will be tasked with solving such a burdensome financial reckoning?
At its core, the issues facing Americans go beyond the growing national debt and how our nation can contain interest costs for the near future. The public needs to recognize that the accumulated annual budget deficits of our federal government, resulting from the lack of will to balance our revenues and expenses, represent a claim on the future standard of living of the American people. Future generations face the unfair prospect of being chained to the repayment of the public debt, plus interest, racked up by their predecessors.
For our children and grandchildren, that may mean the end of the American dream — a dream of economic opportunity, homeownership, job security, and family well-being. If we fail them, history surely will not judge us kindly.
DioGuardi is president of Truth in Government. A CPA and former partner at Arthur Andersen & Co., he represented New York’s 20th Congressional District from 1985 to 1989.