Waste of the Day: Debt Held By The Public Will Be “Unsustainable” By 2050
This story originally was published by Real Clear Wire
By Adam Andrzejewski
Real Clear Wire
Topline: The U.S. debt held by the public is expected to more than double during the next 26 years until it reaches an “unsustainable” amount, according to a new study from the Government Accountability Office.
Key facts: Debt held by the public was $26.2 trillion in September 2023, about the same as the U.S. gross domestic product. That means our debt is growing at the same pace as the economy.
Debt held by the public measures everything the government owes to those outside the government. It’s slightly different from the $34 trillion national debt but is usually considered more meaningful because it does not include money that federal agencies owe to other parts of the government.”.
But the GAO expects the debt held by the public to reach a record 108% of GDP in 2028. By 2050, the U.S. debt will be twice its GDP unless spending decreases.
The current record for debt was 106% of GDP in 1946 — right after WWII — and it was only about 25% in 2000.
The debt increases when the government spends more money than it collects and borrows to make up the difference. This has happened every year since 2008, and the federal deficit has surpassed $1 trillion for the last four years.
The GAO outlines several issues the rising debt might cause. The public could lose faith in the government’s credit and stop buying Treasury bonds, which would affect government revenue and lead to “drastic tax increases.”
Workers’ wages could fall, decreasing income tax collection and forcing the government to borrow even more money.
As more money is borrowed, interest payments will take up a greater share of federal spending, forcing the government to either borrow even more or start spending less on programs like Social Security and Medicare. Interest spending is expected to pass $1 trillion by 2029, even more than the U.S. will likely spend on the military that year.
Background: Last May, researchers at OpenTheBooks prepared testimonyon the federal debt for the Senate.
OpenTheBooks called on the federal government to decrease the debt by limiting spending, not by increasing taxes.
Several opportunities for reform exist. The government mistakenly makes over $250 billion in “improper payments” every year. Almost half of unemployment benefits in 2020 were likely stolen.
Even with tax revenue at an all-time high, government debt continues to grow exponentially.
Critical quote: Former Chairman of the Joint Chiefs of Staff Michael Mullen once famously said that “the most significant threat to national security is our debt.”
Summary: For years, politicians have been able to spend government money and defer the debt crisis to future leaders. Soon, that will no longer be an option.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
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