As conventional wisdom and headline Congressional Budget Office (CBO) data would put it, it’s been a whole generation since the United States last passed a federal budget surplus. The year was 2000, and the outgoing Clinton administration, buoyed by the peak of the dotcom bubble’s excesses and working in concert with a Republican Congress, had passed what seemed to be a $127 billion surplus — putting our nation on track to pay off the entire national debt by 2013. During the 2000 presidential campaign, both George W. Bush and Al Gore had promised to aggressively pay off the national debt, so it seemed assured that our nation’s financial future would be in good hands no matter what.
Sadly, America’s yellow-brick-road fiscal future wasn’t to be, and like the Wizard’s powers in Emerald City, the Clinton surpluses weren’t even surpluses at all: Continuing deficits were shrouded behind a smokeshow of nifty accounting that counted already received money ransacked from Social Security as income. Without this accounting fiction, the last budget surplus was achieved over 60 years ago in the final year of the Eisenhower administration.
Unfortunately, soon after the final Clinton “surplus,” the dotcom bubble burst, significantly reducing taxable income, and the September 11 terror attacks inspired a bipartisan flurry of unbridled spending and government expansion. Since then, no matter who has been in control — whether Democrats caroling for ever more welfare or Republicans screeching fiscal restraint but then shamelessly passing bulging deficits — the national debt has grown to nearly $29 trillion dollars.
In accordance with this 20-year-long bipartisan tradition of fiscal frivolity, House Democrats have passed an up to $4.5 trillion extravaganza that’s one of the most alarming spending bills in our nation’s history. This bill includes everything from a paid, 300,000-member Civilian Climate Corps of indoctrinated youth reminiscent of the Cultural Revolution’s Red Guards all the way to a $475 billion tax cut for wealthy property owners in high tax, typically Democrat-run states. But as potentially harmful as many of the bill’s individual components are, what’s most dangerous is its abhorrent size: Evidence from the Penn Wharton Budget Model indicates that this bill is going to wreck our economy.
Here’s why: Assuming the spending proposals included in the Democrats’ bill are continued past their ten year sunset (which is nearly certain, given how most “temporary” programs from the New Deal in the 1930s are still around today), Penn estimates the bill will drag the U.S. gross domestic product down 2.9% lower and boost government debt 24.4% higher by 2050. For reference, baseline GDP is projected to be $34 trillion in 2050; the bill would reduce our future GDP by $1 trillion (or by Mexico's total GDP last year). And with baseline federal debt projected to grow to $66.6 trillion in 2050, the bill would increase the national debt by $16.3 trillion — the size of the U.S.’ total GDP in 2012 — to $82.9 trillion.
If those numbers scare you, that’s because they should. The fiscal cliff is a danger not only to the U.S. economy, but to the American way of life. The U.S.-dominated economic and diplomatic international order depends on faith in our currency and our government’s fiscal solvency. Rising inflation and interest rates spurred by unstoppable, exponential growth in our nation’s debt as projected by the Congressional Budget Office would demolish the American and world economy, wreaking havoc at home and handing free rein of the world to power-hungry pariahs like China and Iran — whose estrangement from our economic system would suddenly be an advantage. In such a scenario, China, for example, would face short-term shocks to its economy but its continued strong growth, enormous budget surpluses, and growing international influence would suddenly make the Chinese yuan and a China-led world order far more appealing than the collapsing American dollar and system.
But how did we get to the point where a single bill could have such disastrous consequences for our country’s future?
Before 9/11 and in the aftermath of America’s 1980s Cold War defense spending buildup that bled the Soviet Union dry, the federal deficit was steadily declining, with the nation’s debt at the turn of the millennium soon expected to become a thing of the past; yet, blaming turbocharged 9/11 spending on 9/11, the dotcom recession, and new tax cuts, the second Bush’s administration posted a $159 billion deficit for 2002, promising to start cutting the deficit next year. But that didn’t happen; thanks to the GOP’s inability or unwillingness to rein in spending and enact reform of exponentially growing non-discretionary federal programs like Social Security, the federal deficit instead grew to $375 billion for 2003.
Thus, in the embers of 9/11, a new bipartisan political consensus emerged among our legislators. They realized they could guarantee their own re-election through egregious spending — first, in times of national crisis when bestowing boatloads of other people’s money could be marketed as valiant patriotism, and eventually, just to stay in office by continuing business as usual. Naturally, this also meant nearly indefinitely postponing the politically unsavory task of restructuring welfare and subsidy programs to prevent the federal government and its debt from strangling the rest of the U.S. economy, as this “reconciliation” bill is expected to do.
Yet, as bad as things are, there are reasons to have hope. Luckily, even if this spending bill passes, five federal election cycles (including two presidential elections) remain before the U.S. falls off the fiscal cliff — or when, come 2032, paying interest on the national debt will surpass combined discretionary and defense spending each year.
Unfortunately, because an increasingly open-purse Democratic party is unlikely to raise taxes while cutting spending to achieve budget surpluses as it did under Clinton, this solely leaves Republicans with the responsibility of righting the fiscal ship.
Yes, when President Trump and the hundreds of Republicans in the House and Senate who controlled Congress during the early Trump presidency passed growing, nearly billion-dollar deficits during an economic boom, calls for fiscal sanity went ignored. At this point, the Republican base has no option but to mobilize again — as it did during its Tea Party era — to demand the fiscal restraint required to ensure the America they know and love can have some chance at surviving the turbulent decades to come.
While the Tea Party’s decline can be tied to its colonization by corporate interests and its neglect of further cultural and economic issues, the movement’s initial success — its activation of millions of Republicans and independents across the country devoted to dismantling the massive U.S. state — nonetheless is the nearest historical model we have for a concerted last-ditch effort to bring our nation back from the precipice of financial ruin. The Tea Party movement of 2009, having embraced at least part of the spirit of 1776, never would have tolerated President Trump’s, Senator McConnell’s, and Speaker McCarthy’s broken fiscal promises, and neither should Republicans today. Sadly, under President Trump and continuing through today, long-serving Republican leaders have harnessed the very real but presently intractable culture war to distract us from one of the greatest possible contagions upending our system — not COVID-19, but a political culture of fiscal abandon and dollars-for-votes farming that trades tomorrow’s shared prosperity for just a few more years of sitting behind the big desk.
To terminate our officials’ fiscal laxity and donor handouts, the same voters who earnestly attempted to throw out the corrupt political class by electing President Trump must dedicate themselves not merely to redirecting the growing power of government for their own benefit, but limiting the growing destructive potential of government that has decimated their lives in the first place. Now, it’s up to Republican voters alone — not the parasitic party itself that has feasted on inaction — to reawaken to the republican virtues of responsibility and self-sufficiency and demand that our leaders cut the corpulent federal beast down to size before it consumes us all. The alternative is nothing short of national bankruptcy and the end of our nation as we know it.
As deficits remain unaddressed, growing interest on existing debt will cause the debt-to-GDP ratio to begin to roll off the fiscal cliff at the end of this decade. These figures, courtesy of the Congressional Budget Office, predate Democrats' $3.5 trillion proposal and reflect the projected federal debt-to-GDP ratio as of March of 2021
Kenneth Schrupp is a Young Voices contributor writing on the intersection of business, politics and media. He’s a public affairs consultant and serves as editor in chief of the California Review, an independent political journal.