In 1989, a New York businessman who was worried about chronic federal budget deficits erected the National Debt Clock in midtown Manhattan to keep a running tally of how much the U.S. government owes. The total had reached $2.7 trillion, and Seymour Durst wanted “to call attention to the soaring debt and each family’s share of it.”
For a long time, it kept rising. In 1998, though, the clock abruptly stopped working. “The computer couldn’t take it anymore,” said Douglas Durst, who had succeeded his late father as head of the Durst Organization. “The numbers were too high.”
But eventually, things changed. The government began piling up budget surpluses, and the clock ran backward. In 2000, Durst decided to retire the clock. “It’s served its purpose,” he said.
He was mistaken, and he soon recognized the clock was still needed. In 2002, with red ink again rising, the clock was switched back on — showing $6.1 trillion. In 2008, though, when the debt blew past the $10 trillion mark, it no longer had enough space to display it. An upgrade was done so the clock could keep up as the debt rose above $19 trillion in 2016 and above $21 trillion this year.
That extra space will not go to waste. In June, the Congressional Budget Office issued a grim forecast.
Federal debt now equals 78 percent of gross domestic product, the highest since we had just finished fighting World War II. The CBO says that under current policies, it can be expected to “approach 100 percent of GDP by the end of the next decade and 152 percent by 2048. That amount would be the highest in the nation’s history by far.”
The Trump administration pretends that its policies will unleash such rapid economic growth that the treasury will get a flood of new revenue. Larry Kudlow, director of the National Economic Council, bragged the other day that the deficit “is coming down, and it’s coming down rapidly.”
Later, he amended his false claim, saying that he “probably should have said future deficits.” But that would also have been false. The CBO projects the deficit will balloon from $804 billion this year to $1.3 trillion in 2022.
What’s wrong with running up more debt every year? It puts upward pressure on interest rates; it requires growing sums to service the debt; it pushes obligations off to future generations; and eventually, it runs the risk that the loans won’t be repaid. Eventually, you become Puerto Rico.
Fiscal experts saw all this coming. Trump and the Republican Congress cooperated to cut taxes last year, but they have shown no stomach to cut spending. With a growing population of retirees, Social Security and Medicare outlays are on a steep upward trajectory. Federal outlays are expected to rise from 20.6 percent of GDP to 23.3 percent by 2028.
If that means bigger deficits, too bad. A spokesman for the conservative Club for Growth said in February, “We should not hold tax cuts hostage because Congress doesn’t have the appetite to cut spending.”
This failure maddens those conservatives who actually want to cut the budget. “Republicans were put on Earth to shrink government,” wrote Manhattan Institute analyst Brian Riedl in National Review. “If they cannot do that, those who remain will soon find themselves having to raise taxes.”
Democrats were not put on Earth to shrink government. And unlike Republicans, they don’t mind raising taxes, at least on corporations and high-income households. But if you think a blue wave this November would wash away the red ink, you have not been paying attention.
The party sees nothing to be gained by vowing to cut federal programs — and victories to be won by promising to expand and add them. Among the items on the Democratic wish list is “Medicare for all.” During his presidential campaign, Bernie Sanders proposed a version that he priced at $1.4 trillion per year.
Free college tuition, which Alexandria Ocasio-Cortez endorsed on her way to defeating Rep. Joseph Crowley in New York, would take $47 billion in federal funds per year under Sanders’ plan. And the list doesn’t end there.
How will they pay for it all? If Washington doesn’t have enough money, it can always borrow, borrow and borrow some more.
At some point, the debt will grow so enormous that it will endanger our immediate economic health. But the people who maintain the debt clock will always have a job.
Steve Chapman is a columnist with the Chicago Tribune.