It’s time for both parties to own the debt — and then address it

The first law of economics is that scarcity is real. The first law of politics is to ignore the first law of economics. The problem is, as politics continues to eclipse economics, federal debt continues to rise — and, over the long term, ever-rising debt will weaken the economy, limit living standards, and threaten U.S. global leadership.

With the White House and Congress needing to raise the debt limit in the coming months, the time has come for both Republicans and Democrats to set aside the politics, take joint ownership of our $31.4 trillion debt and draft a long-term plan of spending cuts and tax increases to begin to restore sanity to our federal finances.

How should they proceed?

For starters, policymakers should find ways to end the brinksmanship over raising the debt, which can shake financial markets, threaten America’s credit rating and weaken its economy. The Bipartisan Policy Center proposes two mechanisms to raise the debt limit: Congress could pass a budget resolution and, at the same time, send the president legislation to suspend the debt limit. Or, in the absence of a budget resolution, the president could automatically suspend the debt limit, subject to a vote of disapproval by Congress.

That proposal mirrors the approaches that the current Senate Republican leader, Mitch McConnell (R-Ky.), and the former House Democratic leader, Richard Gephardt (D-Mo.), authored over the years to enable policymakers to sidestep brinksmanship and raise the debt limit on time and in a responsible way.

Next, policymakers need to come together to adopt a long-term plan that, at a minimum, stabilizes the debt as a share of the economy at current levels. That would remove the danger that an ever-rising debt would present to the economy down the road. To achieve that goal, policymakers almost certainly will need a plan that both reduces the rate of public spending and also increases revenues.

When it comes to the debt, there’s plenty of blame to spread around. In his State of the Union address, President Biden chastised President Trump for contributing over 20 percent to the total federal debt. Yes, gross federal debt rose from $19.5 trillion to $26.9 trillion under Trump, and that $7.4 trillion increase represents 23 percent of the debt. But the debt will rise another $7.3 trillion during Biden’s first term (assuming the president’s recently submitted fiscal year 2024 budget), and that will account for nearly 20 percent of the total.

The broader reality is that today’s debt is the net result of all annual budget deficits since the beginning of the republic, minus all surpluses. Thus, most of today’s debt is due to the decisions of long-retired or deceased officials.

The Congressional Budget Office projects that, under current spending and tax policies, the annual budget deficit will total $2.9 trillion in 2033. The Republican-controlled House Budget Committee says it plans to draft a budget that would reach balance in that year — that is, 10 years from now — without raising taxes.

Due to an unfortunate bipartisan consensus, however, the committee will work with its hands tied behind its back. Both the White House and Congress, Republicans and Democrats, have basically decided that Social Security and Medicare are off-limits for cuts. That removes $4.3 trillion, or a whopping 44 percent, of federal spending that year.

Add in $700 billion in other federal, military and civilian retirement spending, which neither side seems interested in cutting, and you’re up to 46 percent of spending.

Will the White House and Congress cut defense? Not likely, with the Russia/Ukraine war still raging and China’s global challenge growing. That will take another $1 trillion off the table.

Then take note of the interest payments on our debt, which the government must pay and which will total about $1.4 trillion that year.

Add all that up, and that takes about $7.5 trillion off the table for balancing the budget in 2033, leaving just $2.5 trillion in spending to target for cuts that year. Remember: CBO’s deficit estimate for 2033 is $2.9 trillion. 

So, what’s left in that $2.5 trillion? “Nondefense discretionary spending” — $1.2 trillion in what the public thinks of as government: the Education, Energy, and Homeland Security departments; the FBI and border security; the agencies designed to protect our food, air, water and transportation systems; and lots more.

Yes, let’s examine these programs and eliminate their inefficiencies and redundancies. Let’s attack the fraud and protect taxpayer dollars. But even if policymakers eliminated this entire category, which no elected official of either party would do, that’s less than 13 percent of all spending and would leave them far short of balance.

What remains? The “safety net” — some $1.3 trillion in Medicaid, SNAP and other nutrition programs, jobless benefits, Supplemental Security Income, refundable tax credits, and other programs for the poor and disadvantaged. Yes, let’s review these programs for reasonable savings, but nobody’s going to eliminate them.

Any serious effort to stabilize the debt, much less balance the budget in 10 years, will require a holistic approach — a long-term blueprint of reducing spending and raising taxes. The faster policymakers accept that reality, the better.

G. William Hoagland is a senior vice president at the Bipartisan Policy Center; former Senate staff and FNS-USDA administrator.