Another Year, Another Trillion
The federal debt has crossed $22 trillion. That’s $67,278 per American, including babies—and a rapidly-growing population of elderly citizens who receive checks from the government but no longer pay FICA. Their lifelong contributions to Social Security and Medicare were spent during their working years, and all that’s left is a shrinking pile of Treasury IOUs that say the Congress owes some money to the trust funds. That money, of course, will have to be raised via future taxation.
In 2017 the federal government collected $3.27 trillion in taxes, and spent nearly $4 trillion; in 2018 it collected a tiny bit more tax, 3.32 trillion, and spent $4.1 trillion. So far in 2019 (which started on October 1) tax receipts are running ahead of last year, so the pattern is expected to be similar. Tax receipts might creep ahead to $3.44 trillion, while spending races to $4.53 trillion.
The deficit for this year will be $1.1 trillion. That’s 30% more than the $3.44 trillion we will collect in taxes!
The big changes are in spending, which jumped by half a trillion dollars in the last two years. It’s jumped by a trillion dollars since 2014. And it’s going to keep rising, because the Baby Boomers are retiring. The New York Times says:
“The Medicare trust fund will be depleted in 2026, the administration said. By contrast, the government said last year that the trust fund would be exhausted in 2029. In a companion report, federal officials said the Social Security Trust Funds for old-age benefits and disability insurance, taken together, could be depleted in 2034.”
The gruesome details can be found in the Historical Tables offered by the White House Budget Office: https://www.whitehouse.gov/omb/historical-tables/ . Table 1.1 is good, but the really good stuff can be found in Table 3.1, which lays out all the spending since 1940, by category. Entitlements, which roughly correspond to the “Human Resources” categories in the table, have grown from 30% of the budget, in the JFK years and the early Lyndon Johnson years, to 70% of the budget today. They’re crowding out everything else in the budget; national parks, science and technology, defense, natural resources and the environment, and just about everything you think of when you think of the federal government.
If we raise taxes 30% on everybody (including you, dear reader) we can balance the budget for a year or two. But the economy would slow. Wages would stop rising, and some people would lose their jobs and collect benefits instead of paying taxes. Tax revenue would stagnate, and social safety net spending would increase.
Congress is not going to make any painful decisions until there is no other alternative. Of course, if we wait until then we’ll be in a world of hurt.