The editors of the Washington Post continue to ride the hobby that I referred to earlier. This time it’s in the form of a large animated graphic illustrating the increases in revenue and expenditures since 1962.
It’s interesting but it omits several important things. The first is that it neglects the revenue side of the equation almost completely. It shows the revenue but there is little commentary (or animation) associated with it.
The second is that from 1962 to date the federal budget has run at a surplus in a relative handful of years and all but one of those times (2000) the Social Security trust fund surplus accounted for most of that surplus.
The third is that interest paid on the debt for 2026 is roughly the same size as for Medicare.
Without those trust fund surpluses either taxes would have needed to have been higher or the federal debt would be higher and interest on the debt would be higher.
It is tempting to look at the growth of Social Security and Medicare and conclude that without them we wouldn’t have a debt problem. That doesn’t follow. For decades Social Security ran surpluses that financed other federal spending. Without those surpluses, taxes would have had to be higher, other spending lower, or borrowing from the public greater. And eliminating Medicare would not have eliminated the cost of providing medical care to the elderly; it would merely have shifted that cost elsewhere.
We do have a problem, but it’s not simply that we created Social Security and Medicare. It’s that for generations we have been unwilling to pay, currently, for the government we have chosen to have. We’ve been living on the cuff for almost all of the last century, and it’s a very bad habit.
The editors acknowledge that governments are supposed to offset deficits in bad times with surpluses in good times. That’s precisely what we haven’t done. We have run deficits during recessions, wars, and emergencies as a good Keynesian would expect but we’ve also routinely run them during expansions and peacetime.
People’s eyes glaze over when you get into numbers into the trillions. They just can’t comprehend numbers that high. The numbers need to be shared in ways that matter to them personally. For example, our current spending on interest is about $15,000 per year for a family of four. People understand what an extra $1250/mo could do for their family budget.
I want us to at least get serious enough where we can get a primary surplus (budget deficit minus interest).
Dear Charlie, Could you explain what you mean by “primary Surplus”? Just paying interest does not affect the principal. And if you mean annual deficit, just paying the interest on the accumulated deficit means the accumulated deficit increases by the whole amount of the annual deficit.
I note that the Federal Reserve has debased the US dollar more rapidly than the Roman Emperors debased their coinage.
Bob
Payment of Interest only stability is what any creditor looks for first. Else you have a death spiral. Not to put words in Charlie’s mouth, but he really means budget surplus. Net zero
More later, but, in my entire life I have not seen a workout where spending goes on merrily, but debt service or operating expenses are labeled “damn the torpedoes,” and not addressed. But look at our current posture, spend, spend, spend.
Debauching the currency is next. The current Dem Party is beholden to the socialists, and free beer and control of the revenue producing base is their mantra. It should give everyone pause.
Taxes are as large an expense as any other for Americans. But people continue to vote for the same thing. At our firm we call that shooting your dick off.