The United States’s deficit and debt numbers are daunting, but the problem is not insurmountable. If our representatives in Washington can show leadership and put aside partisan bickering, the spending and debt crisis can be solved.
The debt ceiling bill that passed in June generated a lot of discussion and consternation across the political spectrum. Much of the debate over the bill had to do with “cuts” to programs. What politicos often fail to mention is that these “cuts” are not budget reductions as you and I understand them. In “Washington speak,” these are reductions in future projected spending growth.
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The debt ceiling bill also limits discretionary spending to 1% growth. However, discretionary spending is approximately 27% of the federal budget — 73% of federal spending is still allowed to grow with no constraints.
And all the while, our debt continues to spiral out of control ($31.5 trillion as of this article), with our government logging record budget deficits in the last few years.
This is not sustainable, but few in Washington seem willing to find a solution.
On the one hand, many on the Left believe there should be no limits on spending or borrowing. Of course, this would eventually lead to hyperinflation and an economic catastrophe.
On the other hand, there are some on the Right that believe we should not add debt under any circumstances because as a country, we have shown no ability to spend within our means. This concern is understandable, but it may inflict much pain on some groups of people.
Fiscal discipline is key to solving our debt crisis and finding commonsense solutions. As mayor of Orland Park, Illinois, I focused on fiscal discipline, and we initially reduced operating spending by 14% while instituting a target increase of 3% annually, lowering debt by 25%.
To solve the debt and deficit problems, we first need to understand our financial history. Congress controls the budget, and contrary to popular belief, divided government has resulted in the highest spending and the lowest revenue increases as everyone looks to give more away to their perceived base.
Figure 1. Year Over Year Spending Increases by Control of Congress
Source: Congressional Budget Office
Second, we need to evaluate the math to realize that our debt problem is not insurmountable. According to the White House financial projections, revenue is projected to be $6.3 trillion, with spending of $8 trillion in 2023. Applying a 6.25% and 4.68% growth rate annually to revenue and spending, respectively, would eliminate the deficit by 2039 and the debt by 2053. Holding spending to a 4% growth rate would eliminate all of our debt by the end of 2047.
Annual spending growth of 4% does not require significant sacrifice but does allow us to eliminate our debt in less than 25 years. Spending increases of 4% allows Congress to continue to fund social programs and the military and still allows for discretionary spending. Since there is already significant infrastructure spending in the current outlays, spending can continue on much-needed infrastructure year after year. It also gives the latitude to grow social safety nets in a sustainable way rather than allowing out-of-control growth.
The problem is not insurmountable, and it does not require massive cuts to solve. But it does require a president willing to lead on the issue and congressional representatives who can demonstrate a modicum of fiscal discipline. And ultimately, it will require the public to support and elect people willing to roll up their sleeves, put partisanship aside, and work toward these commonsense solutions.
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Keith Pekau is the mayor of Orland Park, Illinois.
