America's Talking - Calls for Fiscal Commission Continue as U.S. Debt Tops $34 Trillion

Episode Date: January 5, 2024

As the U.S. gross national debt topped $34 trillion, groups across the political spectrum continue to call for a fiscal commission to address the mounting federal debt. The thinking behind the idea is that a bipartisan commission could help facilitate agreement on difficult fiscal issues. However, few see such a commission as a panacea for a problem with deep roots and politically controversial solutions. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Greetings and welcome to America in Focus, powered by the Center Square. I am Dan McAulb, Vice President of News and content at the Franklin News Foundation, publisher of the Center Square Newswire service. Joining me again today is the Center Square's Washington, D.C. Bureau Chief Casey Harper. Casey, happy New Year. Happy New Year, Dan. Got any resolutions? I've got several resolutions, none that I'm sure I'm comfortable sharing with our vast audience across America.

Casey, we are recording this on Friday. Friday, January 5th, and the national debt hit a new milestone at the very end of 2023, and not a good one, I might add, surpassing the $34 trillion, that's trillion, T-R-I-L-L-I-O-N, Mark, I can spell. The situation is so dire, there are renewed calls for a fiscal commission to figure out what the federal government needs to do about it. Bring us up to speed, Casey, on the latest debt crisis. Yeah, I mean, in some ways, this story is kind of humorous. commission, Dan, we got all this extra spending leading us into $34 trillion of debt.

We need a commission to figure out what to do. Well, maybe we just cut the spending, you know, let's have a commission. That's like, you know, that's like in the new year when you're trying to lose weight and you watch a bunch of YouTube videos and read articles about how to lose weight when really, you know, you just need to go to the gym and eat better. But yeah, $34 trillion, trillion with a tea, Dan, this has been exploding in recent years and it's actually been getting worse. Now, I mean, the debt's been a long, a big problem for many years, but in the last five years or so, it's actually been getting worse faster because we hit another bad milestone at around 2020, which was trillion dollar deficits. Before 2020, our deficits were less than $1 trillion,

but now we're in the trillion dollar deficit market, sometimes $2 trillion, depending on, you know, the different legislation and the way they tweak the numbers from year to year. So it's rising. There's other big landmarks that we've talked about on this podcast, like interest on the national debt is about to be the biggest expense for U.S. taxpayers. So not defense, not Medicare, not Medicaid, but just interest payments on the national debt is about to be the biggest expense for U.S. taxpayers, which is a pretty incredible, incredible fact. Also, there's several trust funds like Social Security, like the highways fund that are facing insolvency in the coming years if we don't get. So I'm going to come back to that in a second, Casey. Just just a very

brief explainer. You mentioned both the debt and the deficits. The deficit is the annual budget number where spending exceeds revenue by a certain amount of dollars, meaning, you know, just take your personal finances. You make a pretty good salary there, Casey. But if you spend, So your resolutions are private. My salary is. Got it. Keep going. You make a pretty good salary, Casey.

But if you spend more money than you bring in, you accumulate an annual deficit, right? And that's what the federal government has been doing for decades, essentially. But in 2020, as you mentioned, that annual deficit exceeded a trillion dollars. And what that does is add to the accumulating. debt, which is now more than $34 trillion dollars. And if you keep deficit spending, each year you spend more money than you bring in in revenue, that's going to add to that national debt. Did I get that right? Yes, you're right. I mean, that's how it works. And it's important because some experts say, well, you know, our economy is so strong. Our GDP is, of course, the

strongest in the world. The United States is getting afford to carry some debt. But the problem is the debt is still growing in the deficit. So theoretically, you can envision a world where lawmakers do something they don't usually do, it just come together and cut spending, get the deficit down to zero. If they did that, we would definitely be in a much better place financially, and we probably would potentially be okay because the economy is going to keep growing, right? And if the debt doesn't keep growing at the same rate or faster than the economy, then we can probably afford to carry some of this debt. But when the debt is growing this fast and is actually getting larger than the GDP, you're running into a lot of problems. And we're seeing this, Dan, you know,

with interest rates on homes for instance, you know, there is some debate over this, but it's definitely true that debt spending worsens inflation. And because inflation's been so bad, in part because of federal debt spending, they've had to raise interest rates. which is an attempt to cut inflation, but it has the externality of making mortgages very expensive. And so mortgage rates right now are around 8%. And so, you know, you can say that, oh, you know, $34 trillion, it's just numbers on a page. It's, you know, the U.S. can afford to have this. But there are real world impacts. There are 8% interest rates. And as a result of those interest rates, fewer people bought homes.

Right. Because mortgages were just out of control because of that 8%. interest rate. So this, all of this stuff sort of works together and affects the economy overall. And if the U.S. federal government can't get its deficit spending under control, this is only going to get worse. It's only going to balloon. Yeah. I mean, I was a little cynical on the debt commission, but it's true that, you know, if that helps, I think that's great. I think this is something bipartisan, Americans and especially American taxpayers can agree. This is something that needs to be dealt with. It's their money that's being overspent. 34 trillion, you know, we should pass 35 trillion this year, Dan. I mean, so this is a big milestone, but we'll hit it again this year unless something changes. And honestly, Casey, I don't blame you for being cynical about the debt commission.

I mean, it's not like it's a new idea. That's been floated out there for years and years, even decades, and we still haven't been able to get government spending under control. You wrote an interesting story near the end of last year. Casey, that if you took the entirety of the debt and you divided that now, when you wrote it, it was still, you know, $33.3.3. It was only $3 trillion. Now it's $1,000. Oh, that's it. If you were to divide that up among all American taxpayers, the cost to each American taxpayer exceeds $100,000. Now, I don't know about you. I don't just have $100,000 laying around that I want to

give to the federal government to get past this debt crisis. I don't know. The way you're making my salary sound, it sounds like I do. But maybe you do, Casey, of course. You are the talent, as we say. Generational talent. Yeah, I mean, most Americans are living paycheck to paycheck. So the idea that they could just suddenly pay off a debt of $100,000, you're right. I mean, it's not realistic.

Well, let's swing back now to the debt crisis and how it affects things like Social Security and Medicare and Medicaid, you know, these government programs that are, meant there to support retirees, people who are on a fixed-dot income, people who aren't bringing in new income. You mentioned the potential for Social Security to be insolvent in 10 years or the need to cut Social Security benefits to older Americans, those who are retired and aren't working anymore. I mean, how does that impact it? Yeah, I mean, it's all intertwined. And what it really means is one, I think lawmakers are being kind of dishonest with Americans about the impact that these decisions they're making now, we're going to have on them and on their children and children's

children. And it's going to require some belt tightening. So it's not guaranteed that Social Security is going to have some cuts because I think, you know, when that time comes, lawmakers are going to be very highly motivated to intervene and do something. But they can't intervene and do something forever. And so if it's not this, it'll be something else. If it's not social security, it'll be Medicaid. And if it's not Medicaid, it'll be defense. But something has to give somewhere eventually. I don't think we're quite to that point. But if you start talking about, you know, the next couple, you know, two or three decades, you're going to start seeing either, you know, some kind of big changes. At the very least, I think the easiest most manageable change

is to just get the deficit down to nothing. You know, we're under a trillion before COVID. And I think at least we could, we could get there pretty easily. We're just about out of time. But one thing that we didn't mention that the Biden administration has mentioned is tax hikes. President Biden has not blamed the growing national debt, the growing budget deficits on government spending. He's blamed it on not enough taxes being collected, and specifically he's blamed former President Donald Trump's Tax Cuts and Jobs Act for the spiraling deficit. So tax hikes very well could be in the conversation. When you talk about federal taxes, most Americans, I think, will tell you we already pay too much.

But that's certainly part of the conversation. Yeah, I mean, it's definitely, I mean, like it said, something has to give. If it's not some cutting of spending, it could be tax hikes or it could be both. I think that the biggest thing, though, is you don't want to have to make that decision under the gun of debt collection. You know, it's, of course, it doesn't exactly work like that. But the longer you wait and the worst, the situation gets, the more extreme, the cuts are going to have to be, or the tax hikes are going to have to be when you finally do something. The listeners can keep up with this story and more at thecenter square.com. But we are out of time.

Thank you for your insight. Casey for Casey Harper. I'm Dan McKeel. Please subscribe. Thank you for listening. Knowledge is power. And you deserve to know what happens in your state government. That's why the nonprofit.

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