Today’s budget deficits, despite what deficit hawks have been screeching for years, don’t necessarily put a burden on tomorrow’s taxpayer. Though it might seem like borrowing from Peter’s kid to pay Paul, deficit spending can work and cutting vital government programs to decrease the deficit can have dire long-term consequences. That said, there are limits. Many people may take exception to the bold hypocrisy the Republican Party has shown by decrying debt then passing a tax bill that drives it up enormously, but that’s politics. Right now, parents need to be genuinely concerned about how feckless spending will affect their children.
Let’s get the basics out of the way. Massive budget deficits in times of a recession or a slow recovery can be a highly effective policy tool to help stimulate the economy and create jobs. And a balanced budget amendment is little more than a dangerous pair of handcuffs designed to prevent lawmakers from enacting responsible and responsive fiscal policies. The federal government does not, and should not, run its finances like the average family. In fact, it needs the ability to do just the opposite ⏤ spend massive amounts of money in down times and then pay the debt down when the economy is booming.
Now, that said, we have a problem.
Still, after watching Congress’ reckless spending binge, I’m worried for my daughter. Why? Over the last four months, formerly austere Republicans once hell-bent on balancing our nation’s budget presided over a massive, and highly irresponsible tax cut, that adds $1.5 trillion to the deficit. They followed it up in February with a $1.3 trillion spending bill that blew the roof off previously set spending caps and put the country on a course toward massive deficits for years.
According to new projections released last week by the nonpartisan Congressional Budget Office, the two combined will add $1.9 trillion to the debt by 2028, when it is now set to hit $33 trillion. Interest payments on that debt will exceed all the money we currently spend on the military by 2023 and hit $915 billion in ten years. But that’s the future. Let’s focus on the present. The current budget deficit will top $1 trillion by 2020. We are, in short, testing whether or not deficits can be harmful if managed recklessly. If the answer is yes, future taxpayers will foot the bill.
The federal deficit may not sound like a parenting issue, but it is. And it’s one that parents of every political persuasion should be intently focused on.
There is a most likely outcome here and it’s not pretty. We may be enjoying the third longest stretch of economic growth since WWII, but the good times will inevitably end in a recession because they always do. That could happen as soon as next year — though hopefully it won’t. When it does happen, American parents will lose their jobs (don’t worry, probably not you). Family finances will get tight. There will be fewer resources for the kids.
The federal government’s hands, meanwhile, will be tied thanks to obscene levels of spending or tax cuts. There will be less of an appetite for stimulus and fewer fiscal tools available to get the economy back on track. Essentially, the federal government will have wasted the opportunity to help by trying to make a bigger boom instead of putting us on solid footing in advance of the next downturn. This will have been done in the name of chasing the unicorn dubbed 3% GDP growth, which most economists agree is a silly and unrealistic goal.
In the end, both the length of the recession and economic pain felt by American families will be prolonged. The cold comfort here is that parents will likely share their kids’ pain. Cold indeed.
But kids will also feel it. Why? Because it’s harder to spend on social services and vital government programs for children and families when outlay levels are already high. This is just the nature of politics. Thanks to the tax cuts, the country lost a huge amount of revenue needed to pay for health and education programs, Medicare and Medicaid, and the Children’s Health Insurance Program. Not only that but, with healthcare costs outpacing inflation and more boomers reaching retirement (and more veterans in need of healthcare) costs will continue to rise. Without more revenue, of course, services will need to be cut.
This is already happening at a state level with education funding. Those teacher strikes aren’t about greed.
Depending on when the downturn comes, Republicans will likely go back to beating the drums for austerity — conveniently forgetting their ostentatious gifts to the wealthy. There will be a call for draconian entitlement cuts. Spending decisions will be made in that environment. Politicians will compromise with chaos. That’s no way to look out for the kids.
And it’s not like the kids aren’t going to notice. They’ll remember what we did every time they hit a pothole. They will notice that they inherited a dilapidated national infrastructure (who wants to pony up for roads now?) and a bill for it. Kids don’t tend to forget or forgive that sort of thing.
In the end, deficits may not, by their very nature, be bad. Government debt, especially when it’s owed to its own citizens (as 2/3 of ours is), isn’t necessarily dangerous. But therein lies the problem. Just because something isn’t necessarily bad doesn’t mean it can’t be very bad in the wrong context. Running up deficits in a booming economy is a fine example of doing something that might otherwise be acceptable at the wrong time. If you want to explain that to a kid, tell them it’s like eating in the bathroom — the sort of thing responsible adults don’t do.