Studio portrait of Sid Salter. (photo by Beth Wynn / © Mississippi State University)
By: Sid Salter
On March 1, the national debt of the United States exceeded $28 trillion dollars. What is the national debt?
It’s everything our government owes to the public – think bonds and borrowed money – and everything the government owes to itself – think Social Security and Medicare obligations. It’s $22 trillion in debt held by the public and $22 trillion in so-called “intragovernmental” debt – the government owes it to citizens through entitlement programs.
The highly respected and nonpartisan Peter G. Peterson Foundation explains the national debt crisis in these ways:
Our $28 trillion national debt is larger than the economies of China, Japan, Germany and India – combined. It amounts to $218,000 per every U.S household or $85,000 for every American. If every American household paid $1,000 per month toward the debt, it would take 18 years to pay it off. Currently, Americans are paying $800 million per day in interest on the national debt.
With yet another massive COVID-19 relief stimulus package teed up on Capitol Hill, some financial analysts are predicting unprecedented additional national debt growth on the nation’s horizon. But that’s after Republican former President Donald Trump increased the national debt by $7.8 trillion on his watch.
As has been the case for years, Social Security and Medicare entitlements as they exist today are in deep trouble and fiscally unsustainable under current law while at the same time 78 million Baby Boomers like me hurtle toward retirement.
The two largest segments of mandatory federal spending are in fact Social Security and Medicare, estimated to be $2.966 trillion for Fiscal Year 2021. That’s nearly 60 percent of all federal spending, according to the Congressional Budget Office and the White House.
So as a nation, the American economy hasn’t seen debt and deficits at these levels since the end of World War II. But with the federal government able to issue 30-year bonds at 1.4 to 1.5 percent interest rates, the cost of additional government borrowing – even for $2 trillion – is from an adjusted for inflation standpoint (gulp!) negative.
But the multiple COVID-19 inspired stimulus plans, which have far outstripped the Obama-era Great Recession stimulus plans, have escalated debt and deficit problems, and raised the urgency for finding Medicare and Social Security solutions sooner than later.
Before the nation’s debt and deficits rise during and supposedly after COVID-19, Social Security was only projected to be solvent through 2035 – 14 years into the future. Have the COVID-19 hits to the economy and the requisite stimulus spending escalated that timeline? It’s likely that Medicare is on a shorter fuse, say 2026, according to most experts.
In addition, there are predictions that COVID-19 may well impact the fiscal health of both entitlement programs. But other voices are urging a calmer, more rational approach.
Philadelphia Inquirer medical writer Stacey Burling wrote in February: “Over the last year, COVID-19 has been especially devastating for people of retirement age. As of mid-February, those 65 and over accounted for 81 percent of the pandemic’s deaths in the United States. More than 373,000 older adults succumbed to the new virus, according to the U.S. Centers for Disease Control and Prevention.
“Scary as that all sounds, Paul Van de Water, a senior fellow with the Center on Budget and Policy Priorities, expects Congress to rescue these crucial programs before they’re forced to cut benefits to core voters.
“‘The truth of the matter is that Congress never has and never will allow these programs to run out of money,’ he said. ‘No one should lose a moment’s sleep that the pandemic and recession will cause their Medicare and Social Security benefits to stop.’”
But the national debt? That’s worth some worry.