Editors at the Washington Examiner argue that Americans must make difficult decisions soon about government spending.
Maintaining the world’s most lethal fighting force is expensive. From a high of 35% during World War II to 11% during the Korean War and 9% during Vietnam, the United States has always devoted a significant share of its economy to providing the world the security needed to lift billions of people out of poverty.
But now, just as China threatens the world order that has promoted widespread prosperity, our federal government will, for the first time, spend more on debt interest payments than on defense.
A Congressional Budget Office report last week says Washington will spend 3.1% of gross domestic product on interest in 2024, and just 2.9% on defense.
It gets worse as the future arrives. By 2034, the CBO projects, the federal government will spend 3.9% of its GDP on interest compared to 2.5% on defense. If anything, the numbers will be worse because the CBO’s assumed baseline interest rate is far lower than the yield on 10-year Treasury bonds. In all likelihood, the government will pay a far higher portion of the GDP just to cover interest on existing debt.
That debt is set to rise to $48.3 trillion by 2034. In 2011, it was just $10 trillion. It is double that now, just a decade later, and in another decade will double again.
This is not sustainable. It is ruin.
Figures 1-3 on page 27 of the CBO report make it crystal clear that the cause of these massively unsustainable deficits is excessive spending. From 1974 until today, federal revenues have averaged 17.3% of the economy and will be 17.9% by 2034, But spending is set to rise much faster. Federal spending is already at 22.7% and will be 24.1% a decade from now.
The largest drivers are expected to be Social Security (5.0% to 5.9%), healthcare (5.8% to 6.7%), and debt interest payments (3.1% to 3.9%).
