It’s 2005, and for the citizens of Greece, everything is going great. The economy is thriving, and the interest rates on the national debt are low. Politicians aren’t sounding the alarm.
“But a few Cassandras were out there are looking at demographics and the burden of government, saying, ‘We have a problem,’” said Dan Mitchell, a federal economist.
A Cassandra is a priestess in Greek mythology fated to make true predictions.
Two years later, a financial crisis, similar to the Great Depression in the U.S., hit Greece, The European country was allowed to borrow $146 billion from the International Monetary Fund and the European Union in exchange for severe tax hikes and spending cuts. This was one of the many bailouts Greece received. According to a 2015 report, the economy shrunk by a quarter, as the people of Greece faced unemployment, pay cuts, and eroding social safety nets. Those who could leave left the country.
Today, Greece’s debt — the highest in all of the EU — makes up 160.2% of its GDP.
“If there were some responsible lawmakers in Greece, who, five or 10 years earlier, had simply taken some responsible steps to slow down the growth of government ... all that economic and human suffering could have been avoided,” said Mitchell in an interview. “Now, I think the same situation is true in the United States.”
Mitchell admitted he doesn’t know when the U.S. will hit the brick wall. It could be in two years or 15. “But there’s no question we’re heading in a dangerous direction,” he said.
The latest poll by Main Street Economics, a nonpartisan organization that educates the public about fiscal responsibility, found more than 85% of Americans are anxious and troubled by the ballooning national debt of $34.47 trillion, which equates to over $100,000 per citizen.
In the poll of 1,000 U.S. voters, 59% said they believe lawmakers aren’t doing enough to address the debt crisis while only one-third, or 34%, of the voters think policymakers are tackling the issue.
Les Rubin, the founder and CEO of Main Street Economics, in an interview with the Deseret News said the results show Americans understand the debt problem in the U.S. but “They don’t really understand exactly how we got here and how to fix it.”
Rubin and Mitchell, through the poll and their latest book, “The Greatest Ponzi Scheme on Earth,” released on March 15, are trying to inform people so they can relay feedback “to our Lords and masters in Washington,” said Mitchell.
In the poll, voters were most concerned about inflation, crime and wars. But the survey noted that “the national debt ties in well with” the top three issues dealing with personal safety and security.
The U.S. Government Accountability Office in a recent blog post also warned of “serious economic, national security and social challenges” if the federal government doesn’t remedy the “unsustainable” fiscal path it’s on. In October 2023, the U.S. government paid $76 billion in interest on its debt, up 77% from $43 billion in October 2022, according to CNN.
“I see it as a Ponzi scheme because the only we pay the debt is by borrowing more money,” Rubin said.
The poll also asked voters which federal agency they would do away with, and 28% of people picked the IRS as their top choice, followed by the Department of Commerce, overseas military bases and the Environmental Protection Agency.
“People have always disliked having to pay taxes,” Mitchell quipped, adding, that dealing with the IRS isn’t easy, “whether it’s some computer-generated deficiency notice or an audit.”
Plus, he noted, the Biden administration’s decision to give the IRS an additional $80 billion has made plenty of headlines, which, as the poll suggests, people have noticed. But the IRS in particular isn’t the problem. It is the fact that the U.S. is “increasingly becoming a European-sized welfare state.”
Last week, Congress passed a partial spending package of $460 billion after leaning on four stopgap bills in the last year to avoid a shutdown.
From a 10,000 foot view, there are two areas Congress has to reform, said the Main Street Economics founder. The first is entitlements, which now comprise 70% of the budget and don’t go through the annual appropriations process, Rubin said. “The other is the size of the government. If you go back to what the Founding Fathers designed, our government was limited, and that’s not what’s happening today.”
Mitchell chimed in, saying salvaging this situation doesn’t require Draconian budget cuts, but a slowed growth of spending.
“The proponents of bigger government have been very successful in just adding more and more on to the federal Leviathan,” said Mitchell. “What we’re saying is, let’s at least just put government on a diet.”
Some lawmakers are echoing Rubin and Mitchell’s concerns. Both of Utah’s Republican senators, Sen. Mike Lee and Sen. Mitt Romney, have spoken regularly about their concerns with the growing national debt.
Lee earlier told the Deseret News the debt stems from a spending problem, not a revenue problem, and is a “deep concern for the future economic stability and prosperity of our country.”
In November 2023, Sen. Mitt Romney, R-Utah, and Sen. Joe Manchin, D-W.Va., proposed establishing a fiscal commission, charged with finding legislative solutions to stabilize and decrease the debt.
This bipartisan commission would include 12 lawmakers and four outside experts. Any report or legislation produced by this body would have to be approved by a majority of the elected officials on the commission, with at least three members from each party, according to a one-page fact sheet.
Rubin said Romney’s legislation is “a step in the right direction,” but added that it would be better if experts have a vote to avoid getting into “a political morass and not accomplish anything.”
Mitchell noted that models like the Defense Secretary’s Commission on Base Realignment and Closures have proved to be successful. This commission, established following the end of the Cold War, was responsible for the closure of 350 military installations, creating $12 billion in savings annually.
Politicians with military bases or facilities fought against shuttering them, “But everyone knew that with the Cold War being over, the Pentagon was ridiculously overextended … and it made sense to consolidate and close certain bases,” said Mitchell.
The Base Realignment Commission didn’t require politicians to vote, giving them cover, said Rubin, “So, when they close the base in their district, they could say, ‘Well, I didn’t vote for that.’”
The politicians appointed to the commission could be a source of worry, too, said Mitchell, especially if “it’s a big-spending populist like a Biden or Trump type.”
He admitted he feels pessimistic about the fiscal commission, but acknowledges it would at least force Congress to have some tough conversations.
In their latest book, Rubin and Mitchell paint a dystopian outcome of a “debt bomb.” This nightmare scenario would take place when investors aren’t willing to buy the debt anymore. If that happens, “you have a couple of choices, all of which are bad,” said Rubin.
“The government will probably start by printing money, which could lead to hyperinflation, and eventually, that fails,” said Rubin. “We’re not dealing with Greece and small countries that could be saved by the EU, we’re talking about the big kahuna — who’s going to save the United States?”