This year is drenched with politics, yet the nation seems oblivious that coming decades of American governance have been irrevocably shaped by what Nicholas Eberstadt of the American Enterprise Institute calls “the largest single ‘state surge’ in American history,” a “tidal wave of public resources”: debt.
In June alone, the federal government’s $864 billion budget deficit was larger than the deficit in all of fiscal 2017. And fiscal 2018. In eight years, the Reagan administration almost tripled the national debt, to $2.9 trillion, but that sum is less than Congress has increased the debt in the past nine months. Because both parties have a powerful permanent incentive to disburse more current government services than current revenue will fund, the pre-pandemic deficit in fiscal 2019 was already almost $1 trillion — at full employment, with 2.3 percent gross domestic product growth.
In 1946, after financing four years of global warfare, the national debt was 106 percent of GDP. After nine months of spending to counter covid-19’s impact on the economy — spending soon to be increased by additional trillions — the debt is about 100 percent of GDP, heading (according to the Congressional Budget Office) to almost 200 percent by 2050. And the Federal Reserve has, Eberstadt says, “crossed a Rubicon.”