How the 2010s Became the Decade of Debt – Daily Signal
At the end of 2009, the total federal debt was $12.3trilliona staggering amount of money.
Now, it stands at an astonishing $23.1trillion. Thats roughly $180,500 of debt for every U.S. household.
It is important for Americans to understand how we got here,and what lawmakers can do to bring back fiscal sanity.
Poor Handling of the FinancialCrisis
The federal government entered the 2010s with sky-highannual deficits. This had two primary causes.
First, the Great Recession reduced incomes and profits,which meant a sharp decrease in tax revenue. A slow economic recovery kept tax revenuerelatively low for several years.
Second, legislators used the recession as an excuse to massively increase the amount of federal spending. The 2009 stimulus package in particular led to record-setting spending levels.
President Barack Obama largely sold this additional spendingas a way to jump-start the economy. But the structure of the stimulus packagetold another story. The politically motivated design of the package meant thatit was ineffectiveat growing the economy.
What it did do effectively was grow the national debt. Lowtax revenue and high spending combined to generate federal deficits of over $1trillion per year starting in 2009.
Between the big-government stimulus and bank bailouts, millions of Americans were fed up with how both parties responded to the financial crisis. The tea party movement was born out of this backlash, and the 2010 election put dozens of believers in limited government in the House and the Senate.
Deficit ReductionEfforts Fell Short
Two events in 2011 showed both the promise and the limits of the tea partys political muscle. On the positive side, the practice of earmarking spending for narrow political purposes came to an end.
The publics concern over deficits led to the Budget Control Act of 2011, which raised the debt limit in exchange for rules meant to reduce the deficit in future years. The law had serious flaws, and tea party members roundly opposed it.
Although the law did serve to restrain spending for a fewyears, its flaws ultimately proved fatal.
First, the Budget Control Act created an ill-fated Committee on Deficit Reduction, which failed in producing follow-up legislation to reduce future deficits. This failure resulted in spending reductions through the annual discretionary spending process, known as sequestration.
Here, the Budget Control Acts primary flaw came to bear: It didnt create a single spending limit to cover everything, but instead created separate defense and nondefense categories, both of which were cut. This meant that sequestration did not distinguish between the vital work of national defense and the secondary activities, such as politically-driven business subsidies.
Defense-focused members of Congress constantly chafed at thespending limits. This gave leverage to members who desired ever-more domesticspending. As a result, Congress passed a series of bills to increase spendinglimits for both categories.
At first, these increases were somewhat modest and partiallypaid for to avoid growing the deficit. However, they established a precedent thatwould have devastating fiscal consequences.
The 2018 and 2019 spending deals were massive and undid much of the Budget Control Acts deficit reduction. Rather than doing the hard work of prioritizing what areas to spend taxpayer dollars on, the McConnell-Schumer and Mnuchin-Pelosi deals threw away any pretense of federal self-control.
At the same time, Congress has also allowedmandatory programs such as Social Security, Medicare, and Medicaidto balloon. Each of these programs is growing at an unsustainablerate, and combined they threaten to crowdout core priorities such as national defense.
This brings us to a terrifying prospect: The deficit for 2020 is expected to exceed $1 trillion once more. Worse, the deficit is projected to stay above $1 trillion for the rest of the coming decade.
What makes this situation especiallyunconscionable is the strength of the economy. A time of low unemploymentand no major wars is usually an occasion for low deficits and even balancedbudgets. Instead, Washington is abandoning its responsibilities.
But its not too late for that to change.
A Path to SeriousReform
The Heritage Foundations Blueprint for Balance provides a comprehensive guide for responsible policymakers to bring the federal debt under control.
This includes making pro-growth tax reform permanent and expanding on good tax policy; strengthening budget rules to impose fiscal discipline and legislative accountability; reforming Social Security and federal health care programs to target benefits toward the most vulnerable while reducing costs; and eliminating wasteful and inappropriate spending on federal agencies and programs that fail to deliver on national priorities.
Taking this path would preserve individual liberty,strengthen the economy, and enable civil society to flourish. It would also restorefairness for younger and future generations that would bear the burdenof the $23.1 trillion (and growing) national debt.
The 2010s were a decade of debt. The 2020s must be thedecade of balance.
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How the 2010s Became the Decade of Debt - Daily Signal