Pardon Our Dust
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With midterm elections fast approaching, political coverage dominates every source of media, with a new key issue of the day to debate in both liberal and conservative news outlets. Absent from these discussions is America’s rising fiscal challenge and how Washington can work together to address it.
In an Oct. 17 USA Today opinion article, McGuireWoods Consulting director, Frank Donatelli, breaks down the problem of the federal deficit and America’s growing dependence on debt.
This fiscal year, the federal deficit hit close to $800 billion and is on track to exceed $1 trillion in 2020. Interest payments on the debt will increase dramatically in the coming years due to higher interest rates, higher national debt and borrowing competition from the private sector. In fiscal year 2018, debt interest payments were over $300 billion, and are expected to rise over $600 billion as early as 2022, costing taxpayers nearly as much as the most vital and important federal programs.
Drivers of federal spending include Medicaid, Medicare and other federal entitlement programs. Current Medicaid spending is $400 billion, the Department of Defense is over $600 billion, and Medicare is currently at $625 billion.
“America is paying for current consumption of government services using the government’s credit card that will be paid for by future generations,” said Donatelli.
Resolving this problem will take bipartisan cooperation and a major reform of these government programs – similar to what was done in 1983 when President Ronald Reagan and key Democrats worked together to reform the Social Security system.
“It [was] a great example of both parties placing the public good over and above short term political opportunity,” he said.
Today, Republicans continue to push for tax cuts, increased spending for defense and border security. Democrats talk about free college plans and expanded healthcare.
“Elections are supposed to clarify policy choices and set the future direction of the country,” Donatelli said. “Unfortunately, after November, America will still be running in fiscal circles no matter who wins.”