Introduction to my thoughts on the Skyrocketing National Debt:
As we all (hopefully) know, the national debt is skyrocketing. Especially the federal government’s debt. Despite revenue increasing due to President Donald Trump’s tariffs and tax cuts, the federal debt has risen tremendously and, unlike in early America, no effort is being made to pay it back. Why is that? Well, it’s because there is a complete lack of fiscal responsibility in the government right now. Both sides of the aisle have shown they are unable to effectively control their spending impulses and balance the budget.
In that vein, there was an excellent article in USA Today yesterday morning about the national debt. The article, written by the editorial board of USA Today, is called “Donald Trump, $22 Trillion National Debt is No Laff-ing Matter.” The “Laff-ing Matter” pun comes from Arthur Laffer, a prominent supply side economist.
In this post, I will discuss the USA Today article and describe my thought on the national debt. The article on the skyrocketing national debt is excellent, and you should read it in full after finishing this one.
Summary of the the Problem with the Skyrocketing National Debt that America Has:
The article describes the differences between Republican and Democrat tax and spending policy and how both policies have led to irresponsible spending.
Republican tax policy:
The article begins by describing a relatively unreported on event: President Donald Trump awarding the Presidential Medal of Freedom to Arthur Laffer. Why does it begin with that seemingly unimportant event? Because Laffer is one of the main economists behind promoting supply side economics. Supply side economics, sometimes derogatorily referred to as “voodoo economics,” is the idea that tax cuts will lead to enhanced economic growth. That is the economic policy that the Trump administration seems to subscribe to.
Supply side economics might work. They might not. Trump and Ronald Reagan are the two presidents that have tried to implement supply-side policies. While economic growth has resulted both times, so have federal deficits and the skyrocketing national debt has, as a result, shot up.
For example, the government spent $237 million more than it collected this past February according to the article. That’s the largest monthly deficit in history. Furthermore, the deficit this year is expected to top $1 trillion dollars. The last time that happened was during the dark days of the 2008-9 Financial Crisis. The fact that this $1 trillion deficit is taking place during an economic boom is terrifying. If rates increase substantially, then the payments on the debt will rise to unsustainable levels.
Supply side policies are supposed to stimulate growth through cutting taxes. Theoretically, those tax cuts will be paid back through increased tax revenue due to the enhanced growth. And that might be true. President Donald Trump’s cuts have brought in increased revenue. But still the debt and deficit rises. Why is that?
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Democrat tax and spending policy:
The article says that while Republican tax policy has been irresponsible, it is nowhere near as bad as current Democrat tax and spending policy, especially Joe Biden’s tax policy plans. The new term is “Modern Monetary Theory.” That theory states that the government can, in effect, spend as much as it would like because it can borrow more money to pay for it.
Then, if keeping up with the debt gets too expensive, it can cancel it. Any examination of that policy shows that it is nonsense. The world would lose faith in our government if it simply canceled its debt as a way to avoid the costs of the skyrocketing national debt; we would be unable to sell our bonds and that would destroy our economy.
Additionally, Democrats are borrowing against the future to pay for increasingly expensive social programs. Tax cuts happen in the here and now. There is the potential for them to quickly pay off. Modern Monetary Theory, however, relies on everything working out in the future. If anything goes wrong, it could lead to even worse problems than tax cuts. The article does a good job of identifying and describing that problem and how it has contributed to the skyrocketing national debt.
Like everyone else in the world, I don’t like having to pay taxes. But, unlike most others, I dislike the idea of irresponsible borrowing even more than paying higher taxes; increasing the skyrocketing national debt through further deficit spending is just as disturbing and morally, politically, and economically wrong as raising taxes. And the federal government, prodded on by right and left, has been borrowing unsustainably and irresponsibly. Despite the snake oil of Modern Monetary Theory sold by the uneducated likes of AOC, the government cannot borrow indefinitely. Eventually that money will need to be paid back.
Federal spending is rising at a precipitous rate. Some of that increase has been needed, such as increases to the defense budget to counter Chinese and Russian defense spending. But most government spending is unwarranted. For example, entitlement spending is eating up over 60% of the government’s budget. Imagine how useful that money would be if taxpayers could keep it instead of sending it to the bureaucracy to be redistributed. The effect on the economy would be huge because taxes and spending would be cut, so we could decrease the skyrocketing national debt and be taxed less. Even marginal cuts and restraints on entitlement spending would be hugely helpful towards balancing the budget.
The problem with supply side economic policies is that the two presidents who have implemented them haven’t restrained federal spending. Both have pursued huge defense buildups without making significant cuts to the welfare state. As long as that continues, supply side economics won’t work. The deficit and debt will rise to unsustainable levels. Cut taxes and spending to reign in the skyrocketing national debt.
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The skyrocketing national debt is a problem that can be fixed. As “The History of the US during the Administrations of Thomas Jefferson” describes, his administration valued cutting the debt above most other things. It was their top priority. And making it their priority worked- they were able to put the US on a plan to pay off its national debt very quickly.
So it can be done; we can pay back the skyrocketing national debt and return to fiscal responsibility. Current and future administrations just have to prioritize it and find programs that they can cut. It will be difficult, but if Thomas Jefferson can do it in a country struggling to survive, then we, now in the richest country on Earth, should also be able to cut the debt.
If you recognize the problem posed by the skyrocketing national debt, or just want to learn more about it. It is a great article from a relatively neutral perspective. Enjoy!
By: Gen Z Conservative