The numbers are mathematical, not political. Unless the United States begins restoring fiscal discipline, future generations will inherit a nation burdened by debt, weakened by chronic overspending, and headed to a bankruptcy that could be prevented.
Washington is run by professional politicians, not statesmen, whose focus is on the next election, not the next generation. They have operated under a simple formula. Promise more benefits, avoid difficult decisions, and borrow the difference. Politicians of both parties have found it easier to finance today's priorities with tomorrow's dollars than to ask voters to accept the tradeoffs required for responsible budgeting. Voters reward this and vote for them. The result has been a steady erosion of America's financial foundation.
Most Americans understandably do not spend their evenings reading Treasury reports or Congressional Budget Office projections. They are focused on raising families, running businesses, paying mortgages, and keeping up with the rising cost of living. Yet the government's financial statements tell a story that should concern every one of us. The reports make clear that our financial direction is unsustainable.
The federal government now carries more than $39 trillion in interest-bearing debt, and that total continues to grow by roughly $2 trillion to $3 trillion each year. If current trends continue, the debt could approach $70 trillion within the next decade. Meanwhile, unfunded obligations for Social Security and Medicare (promises to recipients for which there are no funds to cover) are estimated at approximately $7 trillion, while annual interest payments on the national debt have climbed above $1.1 trillion and continue rising rapidly.
Those figures are the unavoidable consequences of spending more than the government collects year after year, not partisan talking points.
The outlook for America's major entitlement programs is equally troubling. Social Security and Medicare trust funds will be exhausted in six and seven years, respectively. Under current law, at that point, benefits cannot continue at their currently promised levels. Unless Congress acts, Social Security benefits would be reduced by roughly 22 percent, while Medicare benefits would be reduced by 11 percent. Every year meaningful reforms are delayed, the options become fewer, and the necessary adjustments become more painful.
History demonstrates that fiscal crises rarely arrive without warning. Governments can borrow heavily for years, sometimes decades, creating the illusion that rising debt carries few consequences. Eventually, however, confidence begins to erode. Investors demand higher interest rates, borrowing becomes more expensive, deficits accelerate, and governments find themselves trapped in a ‘doom loop’ that will eventually lead to bankruptcy.
No country in the world's history has survived forever, and financial problems have been the chief problem. Will we go the way of past countries, or address our problems and prosper?
Informed citizens recognize this problem, but most of our citizens are not aware of how serious the problems are. This week, Michael Bloomberg in his opinion piece argued that advanced economies, particularly the United States, have accumulated so much debt that the next financial crisis could be fundamentally different from the one experienced in 2008. During that crisis, governments possessed the financial capacity to rescue the banking system. If governments themselves become financially overextended, Bloomberg asks an uncomfortable but necessary question: Who rescues the governments?
We are not too big to fail; we are too big to save!
The conclusion is both practical and sobering. Restoring fiscal discipline will require political courage, spending restraint, and bipartisan compromise. Americans may disagree over the specific policies needed to achieve those goals, but the underlying reality is becoming increasingly difficult to deny. Debt matters. Delaying action only guarantees that future solutions will be more disruptive and more painful. The United States has long benefited from extraordinary economic strength, deep capital markets, and the confidence of investors around the world. Those advantages have provided tremendous flexibility, but they are not cast in stone. We are rapidly squandering those advantages.
The solution begins with economic education. The American people must understand the seriousness of these challenges and demand that their elected representatives fix the fiscal mess they have created. Every citizen should ask one simple question: Are you comfortable leaving your children and grandchildren a country that is essentially bankrupt and headed toward failure? If the answer is yes, then continue pretending nothing is wrong. Problem? What problem? But if the answer is no, then the time to act is now.
Americans should demand fiscal responsibility. They should demand honest leadership. They should demand that Washington stop mortgaging our children's future to pay for today's political promises. And if elected officials refuse to act, voters should make it clear that they will support someone who will. Nothing commands the attention of politicians more than the prospect of losing an election.
The numbers tell the story. They are mathematical, not political, and they cannot be negotiated away or ignored forever. The only question that remains is whether Americans are willing to listen and act before the final curtain falls on the greatest economic success story in history.
Les Rubin is the Founder and President of Main Street Economics.