I decided a few days ago to write about the debt madness gripping President Bush and Congress, planning to explain how servicing the increasing national debt will crush us economically as the growing interest payments overwhelm our ability to pay for government with reasonable taxes. MSNBC beat me to it.
The cost of hocking ourselves to the eyeballs shows up in the line of the federal budget that says how much interest we’re paying. Interest will run about $350 billion in the current fiscal year, according to projections by the nonpartisan Congressional Budget Office. It rises to $385 billion next year, $426 billion the year after and so on. This is without Katrina. Just the interest on Katrina-call it 4 percent on $200 billion-is $8 billion a year. While $8 billion is trivial in a world of $2 trillion federal budgets, it’s still $40 billion over five years. That’s more than the aforementioned $35 billion of social-spending cuts would save.
Anyone who’s ever gotten himself into credit card debt understands the basic principal behind this. Borrow a little money and the interest payments are wasteful but manageable. Borrow a little more and the trouble begins. Fail to increase income or reduce expenses and the growing interest payments become a snowball. I did this in college and it took me a decade to dig out of it. The difference between me and the federal government is that I acknowledged my recklessness and adjusted.
Remember, President Clinton and Congress balanced the budget in the mid-1990s (with help from the Social Security
Trust Fraud Fund, but rigged and balanced is better than rigged and deficit). Then the electorate gave complete control to one party (the “fiscal conservatives”, no less) and the budget flailed about, spitting out money without burning its own fat or gobbling any new funds to meet the demand. Under President Clinton, tax increases enabled the balancing. I don’t support tax increases now, and even if anyone in power did, it’s not going to happen. That leaves cost-cutting. Every time Congress votes for more pork and every time the president signs that pork, know that there are real consequences. And those consequences grow every year.