U.S. National Debt Passes $22 Trillion
SCOTT SIMON, HOST:
The national debt passed $22 trillion this week - the highest amount ever. And deficit hawks aren't really screeching? To talk about how we got here, what it might mean, is Bob Bryan. He's a senior policy reporter at Business Insider. Mr. Bryan, thanks so much for being with us.
BOB BRYAN: Thanks for having me.
SIMON: President Trump campaigned on a pledge to not just reduce the national debt but eliminate it. So how did we get to the biggest national debt ever?
BRYAN: There's a long history, and there's a short history. The long of it is for the last 30 years, we haven't been taxing as much as we've spent. That's the simple way to put it. If you're looking in the short term, a lot of it is we're spending a lot of money on an aging population. In just the last few years, we've seen the Republican tax reform laws actually slash taxes, which has brought down the revenue coming into the country into the Treasury. And at the same time, Congress agreed to this two-year spending bill, which really raises the amount of money that we're spending on various programs.
SIMON: Now, the whole logic, though, of cutting taxes, of course, was to increase public spending and thereby that bank shot would increase tax revenues, ultimately.
BRYAN: Yeah, that's the idea. We've definitely seen corporate tax revenues drop off. Last year, we saw corporate tax revenues, after their tax rate was cut, fell off a cliff significantly. We haven't seen that on the personal side yet, but the idea is that even if you cut taxes and lower revenue in the short run, that the economy grows so much faster that your revenue is going to overall in aggregate get higher. At the same time, you know, our spending has been going up. So it's unclear whether or not that's really happened.
SIMON: Now, years ago, I covered the bankruptcy of a great American city. And I know one of the problems that they had to confront was paying the debt service. They had to pay that off before anybody else got paid.
BRYAN: Yeah. Debt service is a significant portion of the amount of debt that we're paying. In fact, there are reports that the debt service that we pay is going to grow larger than some of these major programs like Medicaid and Social Security in coming years. As interest rates go up as well, it becomes more expensive to pay it down. So not only the debt that we've accumulated is going up but also the amount that we are having to pay to pay off that debt also goes up.
SIMON: Well, let me try and get hold of that statistic. You mean, it's possible that because the deficit is so large we might be paying more to service that debt than we're paying out to take care of people under Medicare or Social Security.
BRYAN: Yeah. So as interest rates rise, too, it's going to get more expensive to pay it. So the amount we're going to have to put towards debt service is going to get significantly larger - at least projections say so.
SIMON: Why do so few people no longer consider this a crisis?
BRYAN: Politically, I think a lot of it is because doing the things that would be necessary to handle the debt are unpopular - cutting back Social Security, cutting back Medicare. It's tough to cut those because a lot of people depend on them, a lot of people like them. From an economist perspective, there actually is a growing school of thought that the debt isn't as big of a deal as we've made it out to be. There is a growing economic theory called Modern Monetary Theory that surmises that the number, this $22 trillion number, actually isn't the important part about the debt. It doesn't matter what the number really is. It's how it's affecting the economy. And so right now, we're still seeing a strong growth economy. The inflation is still low.
SIMON: Do you see this deficit becoming politicized into an argument that entitlement programs like the ones you just mentioned should be slashed?
BRYAN: So for years, politicians, especially in the Republican Party, have been saying that to get the debt under control, we need to address the big, long-term drivers of the debt. Those are Social Security, Medicare, Medicaid. But actually getting around to cutting those programs is pretty difficult because it is so politically unpopular.
SIMON: Now, I noticed President Trump at his press conference on Friday seemed to think that there were billions to be saved by coming back home from foreign wars, foreign deployments, which, we should remind ourselves, that used to be a Democratic principle.
BRYAN: Right. And that is very much kind of, as Democrats have been saying for a long time, why do we need to cut these programs that Americans rely on when we're spending so much money in Iraq, Afghanistan and that sort of thing? And I certainly think that those are a large driver, but they don't take up as big of a slice as a lot of the programs, the entitlement programs and the stuff that we do back home.
SIMON: Bob Bryan, senior policy reporter at Business Insider, thanks so much for being with us.
BRYAN: Thanks for having me.
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