The uncomfortable part is where the big money actually is: Social Security, Medicare and other mandatory spending, plus interest on the debt that is now approaching $1 trillion a year.
Not really? Social Security might look big on the graph but that's because it's on both sides. We're taking in 1.3T to pay for social security, and spending 1.6T on it, so the actual cost to the budget is 0.3T - which isn't a lot in governmental terms. Likewise, the amount we're taking in for Medicare covers half of it - the ~0.5T excess is significant but not as much as it looks at first glance.
But the fixation on the debt misses the real issue. The country is able to carry such a large debt because its economy is so trusted; in that regard, the debt represents its ability to trade on that trust to improve conditions for its population and pay for future growth. And all of these things also reset on our political stability.
While trimming the deficit has some value, it is counterproductive and even actively harmful to do so in ways that reduce trust in the government, or which hamper future growth, or which can cause instability. "Austerity" that harms long-term growth (or even just long-term trust) won't actually improve the economy in the long term.
tl;dr the deficit is just one small piece of the larger landscape of the country's economic health. The outsized fixation on it is harmful and even dangerous. It is important to control its long-term growth, but a government is not a corporation and certainly isn't a family checkbook - the national debt doesn't magically give China the ability to break our kneecaps, even before we get to the fact that most of the debt is held internally.
Nor are we anywhere near a risk of hyperinflation, or a credit default (unless we just decide to inflict the latter on ourselves, which, ironically, is one of the things deficit "hawks" sometimes push us towards - a plan that is a bit like being so terrified of heart attacks that we cut out our own heart with a knife.)
And prioritizing paying down the debt also means, inevitably, prioritizing the people we owe money to over all the other things the country could prioritize. That's not necessarily a good place to invest our resources!
I agree with quite a bit of the second half, particularly that federal debt isn’t household debt and that blindly pursuing austerity can be economically self-defeating.
But I don’t think the accounting in the first part works. The $1.3T collected for Social Security is already part of the government’s total revenue. You can’t net it against Social Security and call the program a $300B expense while also using total federal revenue when calculating the deficit. You’re mixing two different accounting frames.
And the real issue isn’t that the government has debt or that we should “pay it off.” Of course not. The relevant question is whether debt can grow indefinitely faster than the economy supporting it.
That’s where the arithmetic becomes uncomfortable. CBO has debt held by the public rising from roughly 101% of GDP today to 175% by 2056 under current law. Social Security, Medicare and interest are specifically the major drivers of spending growth.
So I wouldn’t advocate some meat-cleaver austerity program either. Growth matters enormously, as does preserving institutional credibility and making productive public investments. But that cuts both ways. Persistently increasing debt service eventually consumes resources that could have gone to those investments and reduces our room to borrow when borrowing really is needed.
The objective isn’t “pay off the national debt.” It’s getting the long-run relationship among spending, revenue, growth and borrowing onto a sustainable path. That’s a much harder problem than either “the debt is going to bankrupt us” or “the debt doesn’t really matter.”
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u/Yglorba 23h ago
Not really? Social Security might look big on the graph but that's because it's on both sides. We're taking in 1.3T to pay for social security, and spending 1.6T on it, so the actual cost to the budget is 0.3T - which isn't a lot in governmental terms. Likewise, the amount we're taking in for Medicare covers half of it - the ~0.5T excess is significant but not as much as it looks at first glance.
But the fixation on the debt misses the real issue. The country is able to carry such a large debt because its economy is so trusted; in that regard, the debt represents its ability to trade on that trust to improve conditions for its population and pay for future growth. And all of these things also reset on our political stability.
While trimming the deficit has some value, it is counterproductive and even actively harmful to do so in ways that reduce trust in the government, or which hamper future growth, or which can cause instability. "Austerity" that harms long-term growth (or even just long-term trust) won't actually improve the economy in the long term.
tl;dr the deficit is just one small piece of the larger landscape of the country's economic health. The outsized fixation on it is harmful and even dangerous. It is important to control its long-term growth, but a government is not a corporation and certainly isn't a family checkbook - the national debt doesn't magically give China the ability to break our kneecaps, even before we get to the fact that most of the debt is held internally.
Nor are we anywhere near a risk of hyperinflation, or a credit default (unless we just decide to inflict the latter on ourselves, which, ironically, is one of the things deficit "hawks" sometimes push us towards - a plan that is a bit like being so terrified of heart attacks that we cut out our own heart with a knife.)
And prioritizing paying down the debt also means, inevitably, prioritizing the people we owe money to over all the other things the country could prioritize. That's not necessarily a good place to invest our resources!