Long before the COVID-19 pandemic sent the American economy into a downward spiral, our nation had a serious problem with our national deficit. Now, after our federal government spent trillions of dollars in order to support American workers and businesses, our staggering national debt is more visible than ever.
According to the Committee for a Responsible Federal Budget (CRFB) — which projects the debt will grow by a total of $4 trillion in the fiscal year 2020 — the federal debt now exceeds $26 trillion in the midst of the ongoing COVID-19 crisis. This sharp increase in our national debt comes after Congress and President Donald Trump passed the CARES Act in March, which included stimulus checks, unemployment benefits and business support.
Now, with the CRFB and other experts predicting that more federal spending will be necessary to further prop up our damaged economy, Americans face a national debt crisis at a new, dangerous level never seen before. While almost all economists agree this significant government spending was necessary — and we shouldn’t hesitate to spend more in order to support households and businesses for the duration of the pandemic — we have a duty to remember the costs of our growing deficit at the same time.
Kenneth Rogoff, a professor at Harvard University and former chief economist at the International Monetary Fund, states, “I believe we are doing the right thing today by borrowing to make it through this tragic crisis, but make no mistake: It is not a free lunch, and it is not without its risks.” Speaking about the dangers of failing to manage the growing national debt, Rogoff added that in the presence of such a staggering deficit, it becomes extremely difficult for nations to spend in the midst of new crises and shocks. Additionally, he comments, “Many advanced countries are already likely to experience strains to help their populations, especially given the likely coming wave of corporate debt problems, and the need to protect banks.”
Most experts agree now is not the time to directly address the national debt crisis, when the track of the COVID-19 pandemic is so unpredictable. But once we are able to get the pandemic under control and this disease no longer poses a threat to our country, one of our top priorities must be addressing our crippling deficit.
Sadly, most issues and initiatives in our nation today are difficult to agree on, and bipartisan efforts are relatively rare. But everybody can agree that our national debt is dangerous and threatens the futures of all Americans. Sooner than later, we all will have to grapple with the impacts of this debt crisis.
Once our nation is in a position to begin cutting back our national debt, there is a way to do so that benefits all Americans and satisfies the demands of both Republicans and Democrats, who will have to design and pass such legislation. Out of the many tools that the federal government has at its disposal to address our national debt, two of the most common are cutting government spending and raising taxes. Using both of these tactics together, when the time is right, our government can implement a proposal to cut our debt that everybody can agree to.
Although Republicans have been big spenders in the past, the Republican Party is likely to support some form of cuts to government spending, while Democrats are likely to support tax increases. Implemented together, lower spending on programs deemed unnecessary — along with higher taxes on households, businesses and others — would be a powerful and effective path to a more manageable national deficit.
One important point to acknowledge as we aim to solve our debt crisis is that working to manage the national deficit helps more than just the federal debt. Ultimately, through a bipartisan approach that involves both spending cuts and tax hikes, both Republicans and Democrats can accomplish other priorities simultaneously for their constituents. For instance, Republicans may use spending cuts as a tool to eliminate waste from the federal budget, while Democrats may design the tax increases as a way to help reallocate wealth from the rich to the poor.
Ultimately, addressing our dangerous national debt will involve sacrifices from all sides, and we should truly see it as the worthwhile and necessary task that it is. While we should continue to support responsible spending to address the ongoing pandemic, we must begin making plans to get control of our staggering deficit immediately.
Evan Stern can be reached at erstern@umich.edu.