Addressing America's debt crisis

by Tom Cole

Earlier this month, the United States hit its debt ceiling, which is currently at $31.4 trillion. After raising the debt limit by $2.5 trillion just two years ago in 2021, this sobering news should serve as a wakeup call that we must reduce our nation’s spending and implement meaningful fiscal reforms to address America’s debt crisis before it is too late. This fiscal trajectory is simply unsustainable.

The U.S. Department of the Treasury defines the debt limit as “the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.” 

Upon hitting this debt limit earlier this month, the Treasury Department began employing “extraordinary measures” to avoid default. However, these measures are only expected to suffice for several months until all options are exhausted to avoid defaulting on our country’s debts.

Since 2002, the debt limit has been raised a staggering 20 times. While lawmakers have been in a long habit of charging up the nation’s credit card, in just two years, the Biden Administration and Democrats in Congress went on a $5 trillion deficit spending binge that led to record-high inflation, soaring interest rates and a astounding $31.4 trillion national debt – larger than the entire U.S. economy.

The national debt currently makes up 98 percent of the United States’ Gross Domestic Product (GDP), the highest it has been since World War II, and within a decade, it is projected to reach 110 percent of GDP and 185 percent by 2052.

Although Democrats continue to threaten to repeal the Tax Cuts and Jobs Act or impose numerous revenue-raising proposals such as a wealth tax, financial transactions tax or carbon tax, none of these proposals would solve our debt crisis. In fact, our nation’s tax revenue is currently the highest in history.

While Democrats’ irresponsible and reckless spending over the past two years certainly led us to hit our debt limit faster than expected, the true path to long-term fiscal soundness will require lawmakers to address the solvency and trajectory of mandatory spending, which, has grown from 34 percent of the federal budget in 1965 to 71 percent today.

In fact, over the next 30 years, Social Security faces a $36 trillion deficit and Medicare faces an $80 trillion deficit. These shortfalls are the prime drivers of our debt, not lack of revenue.

Although addressing mandatory spending should not entail eliminating these extremely popular programs, we must have a conversation not only as a Congress but also as a country about measures to take to protect these programs while also lowering our unsustainable budget deficits and curtailing our national debt. If we are to preserve these programs for current and future beneficiaries, ignoring the problem is only whistling past the fiscal graveyard. 

In response to these shortfalls, I have already reintroduced legislation this Congress to address Social Security’s solvency. Modeled after the 1983 Social Security Commission, the Bipartisan Social Security Act would create a bicameral and bipartisan commission, chaired by a presidential appointee, to work together to create solutions to ensure that Social Security is fully funded for decades to come and the millions of Americans who have paid into this program throughout their working lives receive the money they deserve.

It is extremely important that the U.S. pay its bills and avoid defaulting on payments. As Congress debates an increase in the debt limit and any concurrent measures to address federal spending, my colleagues must remember that raising the debt ceiling may postpone fiscal catastrophe, but it will not avert it. The only way to prevent a financial doomsday is to enact significant and lasting reforms and stop the spending spree Democrats have been on for the past two years.