Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
The Reality of Our Debt Crisis: By the Numbers
Michael J. Gerson
March 1, 2013
By Michael J. Gerson
This is a transcript of a radio address broadcast for the Center for Public Justice on KDCR radio in Sioux Center, Iowa.
It is becoming common in some parts of the political left to dismiss the problem of debt. Next year’s budget deficit, after all, will be slightly down. And with just a bit more deficit reduction—perhaps $1.5 trillion—public debt as a share of the economy would stabilize.
This has led economists such as Paul Krugman to call the deficit “a problem that is already, to a large degree, solved.” Prominent bloggers dismiss the “deficit scolds” as hysterical moralists. And President Obama has edged toward similar arguments, claiming that we are already near our target on debt reduction, and that changes in entitlement programs only need to be “modest.”
Should we all be breathing a sigh of relief? Not really. And to demonstrate why, it is necessary to deal with some numbers.
It is true that public debt will stabilize as the portion of the economy during the next five years. But it will stabilize at the highest levels in half a century. And then it will quickly start to rise again. In 10 years, debt levels will reach 87 percent of the economy—a level that will seriously impede economic growth. By 2032, it will be 157 percent. By 2037, 200 percent. In 2043, at 250 percent, the economic model used by the Congressional Budget Office crashes. The American economy would collapse well before that point.
Why does the level of public debt begin to accelerate so quickly? It is the result of a combination of factors. The Baby Boom generation is retiring and is beginning to receive Medicare in vast numbers. Health costs will be at a high level. Federal subsidies under the Affordable Care Act will kick in. Interest payments will grow as the size of the national debt accelerates. This combination is completely unsustainable.
What would be the result? It would undermine economic growth. It would raise concerns about inflation. It would make America dependent on the goodwill of bond holders. It would leave our government with less flexibility to deal with future economic crises or national security emergencies.
And it would simply be unfair to the next generation. It is one thing to borrow money from the future to spend on productive investments—infrastructure, health research, innovation and education. But when we borrow from the future to spend on current consumption, it is simply theft from our children and grandchildren.
The only way to confront this medium term crisis is to deal with the drivers of debt—particularly the cost of Medicare and Medicaid. The good news is that—if we act quickly the structural changes in those essential, compassionate programs can be gradual. The bad news is that—if Washington delays action—the adjustments eventually become drastic and destructive.
This problem is not a myth. And even if does not fully arrive for several years, it gets harder to solve the longer we wait.
—Michael J. Gerson is nationally syndicated columnist who appears twice weekly in The Washington Post and is the author of Heroic Conservatism (2007) and the co-author of City of Man: Religion and Politics in a New Era (2010).
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”