The federal debt ceiling is back in the headlines, and the possibility the U.S. will default on its debt payments has some people ready to panic.
As Cato’s David Boaz writes, we’ve been here before (several times). And the end is always the same: there will be no default.
The much bigger problem behind the debt ceiling kerfuffle, however, doesn’t get nearly the attention it deserves:
We’ve become so used to these unfathomable levels of deficits and debt—and to the once‐rare concept of trillions of dollars—that we forget how new all this debt is. In 1981, after 190 years of federal spending, the national debt was “only” $1 trillion. Now, just 40 years later, it’s more than $28 trillion. Traditionally, the national debt as a percentage of GDP rose during major wars and the Great Depression. But there’s been no major war or depression in the past 40 years; we’ve just run up another $27 trillion more in spending than the country was willing to pay for. That’s why our debt as a percentage of GDP is now higher even than during World War II.
Charging the national credit card one of the few truly bipartisan activities in DC:
Seriously, we’ve got the highest national debt in history, at more than 120 percent of GDP. Federal spending has reached levels even fiscal doomsayers didn’t predict. The federal government has spent some $6 trillion responding to Covid. Whether or not that spending was necessary in an emergency, any budgeter knows that when you have large unanticipated expenses, you cut back somewhere else. You don’t say “if we can afford $6 trillion for Covid, of course we can afford another $6 trillion in new programs and transfer payments.”
And that’s exactly where we are today. Remember that the next time a politician has the gall to say programs have bene cut to the bone, and there’s nothing left to sacrifice. That’s not just a lie. It’s a pledge to plunder future generations.
