Ten years is a long time when it comes to predicting money matters. But if the nonpartisan Congressional Budget Office in Washington is right, Utah’s second Winter Olympics might coincide with some shaky economic times in the United States.
This shouldn’t come as a shock to anyone who has paid attention to the nation’s debt problem. What it should do is make voters question why both major political parties have (so far, at least) backed modern-day Neros for president who are content to fiddle away while the flames rise around them.
And why so few people seem to care.
It’s as if the nation is paddling in relatively placid waters, aware of, but willfully ignoring, the waterfalls around the bend.
Hitting those falls about the same time the opening ceremonies begin would not be a good fit.
The Congressional Budget Office is an organization consistently ringing alarm bells over this. We ought to listen.
Virtually every part of the report it issued last month is alarming, as the Washington Post editorial board put it, adding, “Democrats and Republicans alike know the nation is in a difficult budget hole — and just keep digging.”
This report revised debt figures upward from those it published earlier this year, mainly because Congress and the president passed a $1.7 trillion budget bill. If it hadn’t done so, a 1% across-the-board spending cut would have been triggered. The CBO based its old predictions on the assumption those cuts would take place.
In other words, this is one instance in which normal congressional gridlock would have been better than lawmakers actually doing something.
Instead, what was projected to be a burden of $48.3 trillion in debt by 2034 is now predicted to be $50.7 trillion. Instead of the nation’s debt being equal to 116% of economic output, it now is predicted to reach 122%.
The difference hardly matters. Either prediction would exceed the old record of 106%, which was set right after WWII, when the economy was trying to absorb war costs.
But even the latest figures could be too low, because they assume Trump-era tax cuts will be allowed to expire in 2025, and that’s far from a certainty.
In fact, the only certainty seems to be that Washington will keep spending more, regardless of which candidate voters elect.
President Biden is relentless in his efforts to forgive more and more student loans, bailing out college students, many of whom will be high earners because of the education they are receiving.
After the Supreme Court struck down his earlier attempt at this, the president reconfigured the program several more times. Judges in Kansas and Missouri temporarily put a halt to the latest effort last month. The Penn Wharton Budget Model predicted that effort would have cost $475 billion over 10 years.
Long-term costs may have been more. As Jennifer Schwab, founder and CEO of Entity Academy, a workforce development platform, wrote for the Chicago Tribune, loan forgiveness destroys the nation’s meritocracy and “sends the wrong message about personal accountability and fiscal responsibility.”
“Student loans aren’t looked upon as an educational funding tool, but rather as a blank check that students can use to fund their lifestyles,” she wrote.
As I have said before, loan forgiveness also misses the point, which is that higher education is too expensive, requiring students to get loans.
But Donald Trump’s spending habits haven’t been any better. His 2017 tax cuts added an estimated $1.9 trillion to the deficit. Pandemic stimulus spending added much more. This may have been justified, as was recent spending to aid Ukraine and Israel, but that doesn’t erase the fact that it’s money above and beyond what the nation collects.
Now, Republicans are talking about reducing corporate taxes and cutting extra spending that would allow the IRS to go after more tax cheats.
Nobody knows how much debt the nation can sustain before investors lose faith, leading to unstoppable inflation, unemployment, a sluggish economy and the inability for the nation to spread its influence abroad in any meaningful way.
But it’s worth noting that a projected $50 trillion debt in 2034 would coincide with projected crises in Social Security and Medicare, all about the time the world again descends on the Wasatch Front.
It may not happen as predicted. The world could change a lot in 10 years. The nation might even be able to sustain much greater debt than that.
But just to be safe, Americans should demand their candidates begin addressing solutions right now, while we’re still paddling in relatively calm water.