The $30 trillion U.S. government debt is a phony number, critics claim. It’s three or four times that, they say. Persistently high deficits and debts, they add, cause high inflation rates and can retard growth. Critics contend that the nation’s red ink is a problem because, in good times and bad, it keeps rising.
“The official federal debt with Social Security is fast approaching $30 trillion or four times the amount 15 years ago,” Mark Thornton, an economist with the libertarian Mises Institute, told the Epoch Times.
Although previously deficits have generally declined during boom times, large deficits have persisted recently, according to the CBO report.
“Between 2012 and 2019, the debt rose, on average, by nearly six percent annually (compared with nominal GDP growth of about 4 percent). At the end of 2019, federal debt held by the public was equal to 79.2 percent of GDP, higher than at any other time since just after World War II, when it was around 100 percent. In 2019, the government’s interest costs for that debt totaled $404 billion,” the CBO report said.
Critics have also contended governments consistently undercount debt by undercounting some costs.
“The $30 trillion number does not include all of the unfunded Social Security and Medicare commitments. It also does not include the benefits our veterans have been promised,” Sheila Weinberg, founder of the watchdog group, Truth in Accounting (TIA), told The Epoch Times.
“However,” Thornton added, “indebtedness has infected our economy, so add another $15 trillion of household debt, then add corporate, state, and local debt too, with student loans rising the fastest within households.”
Weinberg added, “the $30 trillion is legit if you believe that our seniors, who contributed to Social Security and Medicare their whole working lives, are owed less than 10% of the retirement benefits they have been promised.”
TIA contends that, when all the government’s various retirement, health care, and other obligations are added on, the number is “closer to $141 trillion.”
A Treasury Department spokesman didn’t respond to questions about the consequences of growing federal debt or whether everything is counted. Still, there’s no debate that the number has dramatically grown.
In 1980, the debt to GDP ratio was 34.5 percent. By 2000, it was 59.2 percent. Today, it is 124.7 percent, according to the U.S. Debt Clock.
Debates over the U.S. debt, observers say, are important.
The study examined 101 developing and developed economies spanning a time period from 1980 to 2008.
“The estimations establish a threshold of 77 percent public debt-to-GDP ratio. If debt is above this threshold, each additional percentage point of debt costs 0.017 percentage points of annual real growth,” according to the World Bank study.
The U.S. government’s debt will be “daunting” over the next decade, the CBO report said.
The CBO writes increasing deficits will “dramatically” boost the federal debt over the next 30 years.
“Although long-term projections are highly uncertain, the aging of the population generally and the growth in per capita spending on health care would almost certainly boost federal outlays as a percentage of GDP after 2030 if current laws generally remained in place,” the CBO wrote.
Debt payments could become unmanageable if interest rates suddenly spike, the CBO report said. In the last bout of high inflation, in the late 1970s and the early 1980s, the Federal Reserve, seeking to lower double-digit inflation numbers, had to raise interest rates to the historically high rate of just over 20 percent. This led to a deep recession.
If the Fed has to do the same this time as inflation hits a 40 year high—massively raise interest rates over a short period—just paying the interest on the federal debt could become difficult. The CBO report says debt could gobble up large amounts of the economy.
“Federal revenues also would continue to increase relative to GDP, but they would not keep pace with outlays. As a result, by 2050, debt is projected to reach 180 percent of GDP—far higher than any percentage previously recorded in the United States,” CBO wrote.
Isn’t this a big issue?
TIA’s Weinberg says mainstream media ignores it.
Weinberg, a former television news producer, says the mainstream media doesn’t touch it for several reasons. Reporters, she claims, are often spooked by math and don’t want to embarrass the Biden administration.
She points to a report by the Reston, Virginia-based Media Research Center (MRC) on how mainstream media treated the crossing of the $30 trillion mark.
“But like the delinquents they’ve been,” the report continues, “ABC World News Tonight, CBS Evening News, and NBC Nightly News all ignored the story during their evening broadcasts last night. The new debt figure is actually even worse once you take into account assets and liabilities and unfunded Social Security and Medicare promises.”
Spokespersons for the three network news divisions did not immediately respond to requests for comment.
