Roger Terry: Why the debt crisis is manufactured

Without the Bush and Trump tax cuts, debt as a percentage of the economy would be declining

(Leah Hogsten | The Salt Lake Tribune) Utah Rep. John Curtis addresses the delegates at the Utah Republican Party 2023 Organizing Convention at Utah Valley University's UCCU Center on Saturday, April 22, 2023.

I have been communicating back and forth with my congressman, John Curtis. I write messages on his website, and he sends me form letters in reply.

I am in favor of not using the debt ceiling as a tool of extortion, just as the Republicans saw it when Trump was in the White House. Rep. Curtis now feels differently. He, along with his fellow Republicans, suddenly claim to be worried about the national debt, something that was no concern at all when they passed a completely unfunded tax cut that was estimated by Donald Trump’s own treasury department to add $2.3 trillion to the debt over 10 years.

But are they really serious about reducing the debt? Rep. Vern Buchanan (R-FL) has introduced legislation to make President Trump’s 2017 tax cuts permanent, which would cost roughly $2.6 trillion over the next decade. Of course, they also want to cut spending, but they will not specify how. Why? Because the math simply does not work out.

In his last form letter to me, Rep. Curtis had the audacity to quote a piece of Republican boilerplate nonsense: “Every household and small business must balance their checkbooks and live within their means. Why should Washington be exempt?” Now, this may sound reasonable to the naïve, who, I suppose, are the intended audience of such statements. But let me use Curtis’ analogy to show how misleading this statement is.

Many years ago, when my wife and I were younger, we went into debt to buy a house. At no time did we not “balance [our] checkbook” or “live within [our] means.” We always paid our bills. I looked up our income from 2005, and our mortgage payment was about 20% of our monthly budget.

The federal government also goes into debt to pay for what are deemed necessary expenses (the budget is generally passed into law each year by Congress). And just as my wife and I never defaulted on our debts, so the United States has never defaulted. And there is no reason to think it is in danger of doing so now, other than the sheer hypocrisy of the GOP. In fact, the interest payments on the national debt amounted to $0.5 trillion in 2022, out of a total budget of $6.3 trillion. That is less than 8% of the federal budget, not even half the percentage our mortgage was of our family budget.

If you look at the interest payments as a percentage of the total economy ($25.46 trillion), they come to less than 2% of GDP. Not pocket change, but nothing to threaten economic disaster over.

Now, I’ll be the first to admit that we need to reduce the debt. But holding the world financial system hostage over an artificial debt ceiling is not the way to do it. There is a regular budgetary process, and with divided government we should be able to arrive at a budget that includes reasonable spending cuts (which is not at all what the GOP has proposed) and significant tax increases. Yes, tax increases.

The United States is one of the lowest-taxed countries in the OECD. If there is a primary source for our out-of-control debt, it is not spending. According to the Center for American Progress, an independent, nonpartisan policy institute, “Tax cuts are primarily responsible for the increasing debt ratio. Without the Bush and Trump tax cuts, debt as a percentage of the economy would be declining permanently.”

Spending cuts are both difficult and painful. For instance, we have 10,000 Americans turning 65 every day. Consequently, it will be impossible to cut Social Security or Medicare significantly, if at all, until the baby boomer generation is much smaller. And it would be cruel to cut Medicaid or food stamps or unemployment benefits. We could certainly make cuts to our bloated military budget without jeopardizing national security. But if Republicans are serious about reducing the debt, they will need to support significant tax increases, especially on the wealthy and corporations, who have made off like bandits over the past 40 years.

And they will need to stop using extortion to try to force unwise and unspecified spending cuts.

Roger Terry

Roger Terry is a Utah writer and editor who is tired of irresponsible politicians who are more interested in scoring political points than in serving the real needs of their constituents.