Life is a struggle between the urgent and the important. With the accelerating inanity of our daily lives — through algorithm addiction and the flatulent con man occupying the White House — the important is always overwhelmed by a tidal wave of screeching tweets and self-inflicted wounds.
That’s why you probably missed an obscure but important milestone our country hit last week: America’s debt passed 100 percent of our gross domestic product.
So what, you say? That sounds boring and technical. It’s actually really fucking important. It means that America’s accumulated debt — our impulse to borrow from other people to pay for the things we want and need — is now larger than the total size of the American economy. It shouldn’t take an economist to recognize this as bad and definitionally unsustainable.
The last time our deficit passed 100 percent of GDP, it was World War II. But when countries pass this milestone in ordinary times, it is a formula for decline that has accompanied the fall of republics and empires alike.
What’s particularly painful is that a quarter century ago, America had worked our way out of the hole by achieving a balanced budget — with no deficits and a projected surplus. President Bill Clinton, with comparatively little fanfare, could say: “America can now turn off the deficit clock, long a sign of our leaders’ failure of will, and plug in the surplus clock, a symbol all Americans can look to with pride.”
The formula is instructive and carries the ring of basic math: We raised revenue — i.e., taxes on the wealthy — under Clinton’s first budget; we cut spending, courtesy of the Republican Congress that then came charging in; and the American-made internet boom grew the economy. Zero deficits put us on a path to get out of debt.
This was a huge accomplishment — the policy outcome that fiscal conservatives and independent populists like Ross Perot had been demanding for nearly a decade. It coincided with a unipolar moment with the fall of the Soviet Union. America was on the right track and in pole position. Then we squandered it.
George W. Bush declared that the proper place for any budget surplus was back in the pockets of the American taxpayer. Before 9/11, he passed tax cuts that put us back on the path of growing deficits and debt, compounded by the wars in Iraq and Afghanistan — taking the deficit from zero to $1.2 trillion. As Vice President Dick Cheney famously said, “Deficits don’t matter — politically.” That last word sometimes gets left off, but it’s important. Because deficits do matter in reality. Politically, though, they’re kind of a bummer, which is why you hear Republicans rediscovering their fiscal conservative bona fides whenever they’re out of power.
We have learned this lesson over and over again, so say it with me and never forget it: Republicans only give a damn about deficits when a Democrat is president.
The Tea Party movement, which succeeded George W. Bush’s big-government conservatism, railed against Barack Obama after he had inherited an economy in free fall. Obama actually cut the deficit in half and grew the economy by a far larger margin than his predecessor.
Republicans responded in 2016 by electing the self-styled “King of Debt,” Donald Trump — a man who brags about his refusal to pay bills or taxes as evidence of being a smart businessman — and who holds the unique distinction of being one of the few people on Earth who managed to bankrupt a casino: four times. In his first term, Trump doubled the deficit and grew the U.S. debt by more than $8 trillion dollars, a 40 percent increase in four years.
In 2021, President Joe Biden came in with an economy in free fall thanks to a pandemic. He passed stimulus and infrastructure bills that grew the debt by 25 percent in four years, compounded by the cost of rising interest rates and inflation.
Now, a year and a half into Trump’s second term, we can see that Republicans’ unified control of government has continued to balloon the deficit and the debt while cutting healthcare for millions. Trump is making America into a place where the super-rich get richer and corruption is legalized, at least for now, with the promise of pardons for anyone who gets within 200 feet of the Oval Office. Wall Street is soaring while Main Street suffers. And everyone can see the AI tsunami coming — promising greater corporate profits and efficiencies while existentially screwing working men and women.
I do not mean to sound dire. I am by nature an optimist. Americans do best when we innovate our way out of problems. I believe that we will innovate our way forward again. But we cannot pretend we can defy gravity indefinitely. Deficits and debt matter, no matter who’s president.
That does not mean America is on a path toward inevitable decline. But decline is a choice — and Donald Trump has accelerated us in that direction. Despite all the bluster, he has put America on a path toward further fragmentation and destabilization.
We can work our way out of it, if we have the wisdom to again work across the aisle: raise revenue, cut costs by modernizing government, and unleash American innovation so we can grow our way out of this hole. But if we do not — if we believe we can simply spend indefinitely while cutting taxes in perpetuity — we will find ourselves living in a world where we are a debtor instead of a creditor, susceptible to attempts to replace the U.S. dollar as the world reserve currency. That is a world where we occupy an unaccustomed position of weakness — and that is never the path to greatness.
