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%). While the federal government is cutting checks that increase the portion of the economy taken by hospitals and retirees, for example, defense spending will go in the opposite direction.
Neither of the main presidential candidates from either party has shown any interest, let alone put forward a plan, to address the federal spending problem. In fact, both intend to make it worse. President Joe Biden wants to spend trillions of dollars more on government programs that punish marriage and push mothers into full-time work when they would rather work part-time. Former President Donald Trump would spend more on rebuilding our military, but his budgets will not be sustainable.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The old song says, “Enjoy yourself. It’s later than you think.” But at this late hour, it is no time for Washington to continue enjoying itself by mortgaging the nation’s future. The Social Security Trust Fund is set to run out in 2033. The Medicare Trust Fund will be empty two years earlier than that.
America must make some tough spending decisions, and soon. The longer we wait, the harder they will be.