Four decades of fiscal recklessness
The United States government is $28 trillion is debt – and counting. But it’s easy to forget how recently it was that the debt seemed manageable – a paltry $1 trillion.
That milestone was reached Oct. 22, 1981. As Eric Boehm writes, it was a genuine cause for alarm among some in official Washington:
“If we, as a nation, need a warning,” President Ronald Reagan said in a televised address a few weeks before the country surpassed the 13-figure debt threshold, “let that be it.”
It was a warning that was heeded only in certain quarters, and even then, only briefly:
It was fitting that the debt hit the symbolic $1 trillion figure during Reagan’s presidency, as the Gipper ignored his own warning. Republicans have spent much of the past 40 years venerating Reagan as an icon of conservative values, including supposedly limited government. And while his successors ran up far larger amounts on the nation’s credit card, Reagan saw the government surpass not only the $1 trillion debt threshold but also the $2 trillion threshold.
Meanwhile, few Democrats today agree with President Bill Clinton’s admonition that “we have got to deal with this big, long-term debt problem, or it will deal with us.”
“It will gobble up a bigger and bigger percentage of the federal budget we’d rather spend on education and health care and science and technology,” Clinton, the last president to reduce the size of the national debt over a single fiscal year, warned at the 2012 Democratic National Convention.
The guiding principle for today’s Democratic Party is the idea that debt doesn’t really matter if interest rates remain low. So long as the cost of servicing the federal debt stays below 2 percent, policymakers should not be restrained by the “traditional idea of a cyclically balanced budget,” Larry Summers, Clinton’s treasury secretary, and former Obama economic adviser Jason Furman argued in an influential paper published last year.
None of this would have happened without voters’ consent. We have demanded spending we can’t afford and are unwilling to pay for. Worse, we have turned a blind eye to the debt we are heaping at the feet of our grandchildren.
In that way, Bill Clinton, of all people was right: if we don’t deal with the debt, it will deal with us.