Taxpayers lose big time on debt

By Jennifer Friesen
Posted 8/8/19

Dear Taxpayers of Taos: Do you know what you pay just to cover the interest on the national debt?You have heard that the national debt is huge - it's over $22 trillion now - and …

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Taxpayers lose big time on debt

Posted

Dear Taxpayers of Taos: Do you know what you pay just to cover the interest on the national debt?

You have heard that the national debt is huge - it's over $22 trillion now - and rising. The federal budget just approved will add to the debt: the budget deficit is expected to exceed $1 trillion this year. Tax revenues are down due to massive tax cuts. We can't begin to pay what we owe, so we borrow and borrow. Who pays when Congress lowers taxes while raising expenditures? And how much?

Consider the report of one conservative analyst. Brian Riedl is an active Republican who was an economic analyst for the Heritage Foundation and Marco Rubio, among others. He recently described the 2019 average cost, per United States household, of servicing the national debt:

"Interest on the national debt: $3,054. The federal government is $22 trillion in debt. ... Record-low interest rates have recently held down interest costs. However, the national debt is in the process of surging to nearly $38 trillion by 2029 (it stood at $10 trillion in 2008), which will push annual net interest costs to nearly $6,000 per household--or double that cost if interest rates rise back to normal levels. " (Foundation for Economic Education, April 15, 2019)

We don't really get anything back for that $3,054. No highways, no school lunches, no veterans' benefits, no immigration judges. All of that taxpayer money goes to prop up our credit rating and to forestall foreclosure, in effect, by large creditors like China.

The Congressional Budget Office also projects that interest payments will continue to grow rapidly, rising from $389 billion in fiscal year 2019 to $914 billion in 2028. So, in about 10 years, the average household share will likely be at least $7,000. Just to pay interest. This growth is not sustainable.

What can be done? Congress can decrease spending and increase taxes. But beware of politicians who demand that spending cuts alone can reduce the principal. They are usually in favor of slashing funds for health care, Social Security, farm subsidies, environmental protection, health research, humanitarian aid and other programs that benefit the planet as well as large numbers of people who are not wealthy.

We could demand reasonable tax reform. Why are ordinary folks like you and me actually financing debt that has resulted in part from tax cuts for corporations and wealthy individuals? And do we really need to provide $20 billion in yearly subsidies to oil, gas and coal companies companies when climate science indicates that reducing fossil fuel burning is urgent? Some military leaders think that defense spending is unnecessarily high in some areas.

And maybe someone could remind the president and his supporters - the ones who hope that he'll run the country "like a business" - of the following truth: Even if our nation were meant to be run as a business (it isn't), this is no way to stay in business. Unlike Trump, the United States of America cannot file for bankruptcy and walk away from its debts. Our grandchildren will have to pay them.

Jennifer Friesen is a retired professor of law who has resided in Taos since 1998.

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