The United States has a debt problem

An unfortunate mind-set has grown among our nation’s leaders. It is that the United States can overspend by more than $1 trillion a year indefinitely. Lawmakers assured the country that spending increases – for the wars in Iraq and Afghanistan, and then for economic support during the Great Recession and the pandemic – would be temporary. But, with few exceptions, the fatter budgets largely stuck around. President Biden released his budget proposal Thursday with a nearly $2 trillion deficit for 2024.

This willful blindness to reality on the part of policymakers has allowed the national debt to rise to more than $31 trillion. The nation has reached a hazardous moment where what it owes, as a percentage of the total size of the economy, is the highest since World War II. If nothing changes, the United States will soon be in an uncharted scenario that weakens its national security, imperils its ability to invest in the future, unfairly burdens generations to come, and will require cuts to critical programs such as Social Security and Medicare. It is not a future anyone wants.

Stabilizing the debt should be a top priority for Mr. Biden and Congress. That starts with setting a clear goal. A reasonable target would be aiming not to have the debt exceed the size of the economy (a 100 percent debt-to-grossdomestic-product ratio). Currently, the debt is 98 percent the size of the economy and on track to hit 118 percent in a decade largely because of soaring costs from baby boomers retiring and heftier interest payments, according to the nonpartisan Congressional Budget Office. It doesn’t take a PhD in accounting to see the warning sign here: As debt gets bigger than the economy, the interest costs become so onerous that there is little money left for anything else. By 2033, the nation will be spending more on paying creditors than on the entire defense budget.

Notice that the Editorial Board is not advocating a balanced budget. That may sound ideal, but it’s unrealistic. Lawmakers would have to raise taxes or slash spending by $16 trillion to balance the budget over the next decade. Even the more modest goal of attempting to stabilize the debt as a size of the economy would take close to $8 trillion in savings, the Committee for a

Responsible Federal Budget says. Mr. Biden proposed about $3 trillion in net savings over the next decade, achieved mostly by hiking taxes on the rich and a proposal for the government to pay less for the prescription drugs it buys through programs such as Medicare and Medicaid. He deserves credit for offering some cuts and revenue raisers, but his plan underscores the reality that getting anywhere close to what’s needed over the next decade will take heroic political efforts.

What almost no lawmaker wants to admit is that Democrats and Republicans share responsibility for the bulk of the debt. Instead, they point fingers. Mr. Biden blasts former president Donald Trump for running up the debt with big tax cuts that weren’t paid for. That leaves out the inconvenient fact that he, too, added substantially to the debt with extra pandemic aid approved only by Democrats. Meanwhile, Mr. Biden’s boast that he has reduced the budget deficit by $1.7 trillion since taking office earned him three Pinocchios from The Post’s fact-check team because the bulk of the reduction was going to occur regardless of who occupied the White House as emergency pandemic aid ended.

The scale of sobriety that is now necessary means we will need to do a lot more than lawmakers are acknowledging. Republicans misleadingly claim that the nation’s budget situation would be fine if it just cut back on welfare, waste and foreign aid. Democrats are equally misleading when they suggest it will take hiking taxes on big businesses and the rich and perhaps shaving a bit off defense to get where we need to be.

But here’s the good news: There is a path to stabilizing the debt that doesn’t require massive sacrifice. Americans with modest incomes can – and should – be largely insulated from giving more. The solutions, which the Editorial Board plans to lay out in an upcoming series of editorials, necessitate politicians moving off their favorite talking points.

There’s an urgency to address this. As CBO director Phillip Swagel said last month, “The longer we wait, the more challenging it gets.” Growing annual interest costs – which are on track to triple in the next 10 years – reduce funding for other programs and choke off investment in other parts of the economy.

CBO projects Medicare will have to start making dramatic cuts to benefits by 2030 and Social Security by 2033. There’s another reckoning coming even sooner, at the end of 2025 when Mr. Trump’s individual tax cuts expire. The GOP made the corporate tax cuts permanent, but not the cuts for families. If the tax cuts are extended, the nation’s finances look worse. As Federal Reserve Chair Alan Greenspan put it in 2005 during a debate over extending George W. Bush’s tax cuts: “Instead of making the tax cuts permanent, we should be leveling with the American people about the fiscally shaky ground we are on.” Those words are even truer now.

Some will claim this is fearmongering. For decades, people have heard warnings that borrowing costs would spike and investors would shun U.S. debt when it became too high. A decade ago, this editorial page called a 70 percent debt-to-GDP ratio a “troubling level,” yet the nation has been able to exceed that without triggering a crisis. The economy has continued to thrive and investors – at home and abroad – still buy U.S. debt. But while it turns out the danger point is further away than many initially thought, it is getting closer. Other nations offer a warning. Japan with its 200 percent debt-to-GDP ratio has had years of sluggish growth. Greece and Italy have also had crises and near-crises. The other big difference versus a decade or two ago is the baby boomer retirement is now upon us, hiking the government’s costs at a rapid rate.

Stabilizing the debt might not be a catchy campaign slogan, but the concept is simple to understand. It means putting the nation on a sustainable path to ensure there is money to provide for everything from education to defense to Social Security, not to mention the next security or economic calamity. Mr. Biden, Senate Majority Leader Charles E. Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (RKy.) have been in office for decades. They played sizable roles in creating this mess. House Speaker Kevin McCarthy (R-Calif.) has been in Congress since 2007 and also shares the blame. Now, they have a chance to leave a different legacy: They can put aside their partisan talking points and finally strike a deal that should have been done years ago.