Congress faces steep political hurdles in dealing with rising national debt

WASHINGTON (TNND) — The federal deficit will continue to balloon to record levels in the coming years if Congress does not find a way to reduce its borrowing levels to maintain spending, a challenge that has eluded majorities on both sides of the aisle for years.

The United States has piled up debt approaching $39 trillion as lawmakers approve annual budgets with 13-figure deficits and outlays on mandatory spending balloon with the aging population. There is broad agreement the nation’s finances are in poor shape, yet little indication lawmakers will make real efforts to reverse the trend as political consequences outweigh urgency to address the problem.

Rising deficit and mounting debt have been a bipartisan issue with annual budgets swelling along with increased mandatory spending on entitlement programs like Social Security and Medicare on a steady incline.

Lawmakers got their latest reminder of the problem this week with the release of the Congressional Budget Office’s annual fiscal outlook that estimates the U.S. will run an additional $23.1 trillion deficit over the next nine years. The amount of debt held by the public will soon soar past the total annual output of the economy, surpassing record levels not seen since the aftermath of World War II.

“Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” CBO Director Phillip Swagel said.

The reaction to the report from Congress highlighted the political dynamics that have foiled past deficit-reduction efforts, as lawmakers paired stark warnings about failure to do so with finger-pointing.

“The national debt is the United States’ next great war. If we lose it, we lose America’s leadership in the world and our children’s future,” Rep. Jodey Arrington, the top Republican on the House Budget Committee, said in a statement.

Democrats instead focused on the CBO’s assessment that tax changes made under Republicans’ tax cut and spending bill will lead to increased borrowing.

“This report from the nonpartisan Congressional Budget Office once again makes clear that Republicans have forfeited any right to lecture anyone about deficits,” said Rep. Brendan Boyle, the committee’s ranking member.

Social Security, the country’s most expensive federal outlay, is facing a budget crunch as the population has aged and led to the amount of money being provided in benefits outpacing the tax revenue paid by working Americans to fund it. The program’s trust fund is expected to run out in 2032, which will force Congress to decide how to finance the program to avoid steep cuts to beneficiaries.

Keeping the finances of Social Security shored up will force lawmakers to make tough and politically unpopular choices like raising the retirement age or collecting more taxes. Lawmakers will also be faced with a choice on whether to dip into general funds to keep benefits flowing, which would increase borrowing and be a stark departure from how the program was designed as self-funding through payroll taxes.

Those political predicaments extend to addressing the growing pile of debt. Reversing tax cuts or pulling back funding for government services are both politically unpopular and past efforts to form a bipartisan commission to find ways to address the debt have crashed before getting off the ground with backlash over the tradeoffs that would likely come out of it: force Americans to pay more in taxes for fewer government services.

A majority of voters say the national debt is on the wrong track in opinion polling, though it does not tend to rank highly on their list of priorities when deciding who to cast a ballot for. They are also divided on what the best approach for cutting the deficit would be.

More than half of voters in a Gallup survey from September said they would support increasing tax revenues to reduce debt, while 55% said they opposed cutting defense spending or making significant changes to Social Security and Medicare and were evenly split on cutting spending for other programs.

“When it comes down to it, they want the economy stimulated, they want health care paid for. They want other things that obviously the government can’t afford,” said David McLennan, a political science professor and director of the Meredith poll. “The incentive structure in Congress in particular is not set up to either cut deficits on an annual basis or dig into the debt on a more permanent basis.”

Maintaining high levels of debt poses long-term risks to the health of the United States’ economy and its finances. The ultimate risk rests in the bond market, where investors buy and sell the government’s debt. If markets lose faith in the country’s ability to pay back its debts through a growing deficit and Congress’ brinksmanship with the debt limit, they could demand higher interest rates that would slow borrowing and incur higher costs to finance it.

The net cost of paying interest on the debt is one of the government’s biggest expenses that costs more than the entire Pentagon budget at nearly $1 trillion in the most recent fiscal year. CBO projects interest costs could match the total discretionary spending approved by Congress each year by 2036.

“The scope of the problem is beyond most people’s imagination, and when they can’t imagine what the problem is, it’s hard for them to be serious about the solution,” McLennan said. “Even politicians who understand it thoroughly, it’s about ‘how I get reelected in the next election cycle, somebody else will deal with it.’”