When the COVID-19 pandemic eventually recedes, its global costs will become clearer. Paradoxically, that accounting begins with hardships that cannot be calculated: the suffering of so many families, communities, nations.
Those human losses are paramount. Yet they aren't the pandemic's only lethal legacies. National governments worldwide — ours in the forefront — have fought the pandemic and its side effects with borrowed money. Much of this new debt will fall not only on today's children and grandchildren, but also on our descendants not yet born.
So we were concerned if not surprised by a Wall Street Journal news story headlined "Governments world-wide gorge on record debt, testing news limits." The Journal reports: "The pandemic has pushed global government debt to the highest level since World War II, surpassing the world's annual economic output ... The U.S. government is on course for a budget deficit of $3 trillion for the second year in a row."
We mention this as our government's Internal Revenue Service delivers the first of several child tax credit payments to single parents earning up to $95,000, and to couples earning up to $170,000. Meanwhile, Senate Democrats say they intend to pass a sweeping social, educational and environmental package they price at $3.5 trillion. That's not to be confused with previous COVID-19 relief spending, or a separate and not yet approved outlay on infrastructure.
A MILLION MILLIONS
Because a trillion of anything is a million millions, the formidable term "deficit of $3 trillion" befuddles many Americans, journalists included. The temptation is to toss one's fidgety hands in the air and mutter that these debts belong not to us individual Americans but to a faceless federal government.
Ah, problem already. That government is essentially a big checking account with a standing army; it collects and spends tax dollars. As our national debt rises daily toward $29 trillion, the government's perpetual printing of new dollars threatens to cheapen the currency. In short, we — or our progeny — have to repay every dollar now being lent to Washington by China and other buyers of U.S. bonds.
Maybe the accumulation of debt continues indefinitely without consequence. Or maybe critics cited by the Journal are right to warn that our spending is excessive, "risking an overheated economy and a lasting rise in inflation and interest rates."
Which raises a question we hope citizens will direct to their members of Congress: When does necessary spending on pandemic relief mutate into optional spending on the desirable but unaffordable?
We argue that unchecked cycles of spend-borrow-repeat eventually enfeeble any nation. That may not happen while interest rates are as low as today's. But those rates — the relentless cost to taxpayers of carrying so much debt — now are likelier to rise than to fall.
Note that we are without discrimination in our criticism of spendthrift lawmakers: We often have lacerated Republicans in Washington when they leveraged political control into the reckless accumulation of debt.
Thus far in the pandemic, global securities markets happily support all of our borrowing; because of its prosperity, America is a safe haven for investors.
But as Robert Rubin, the treasury secretary under President Bill Clinton, warned in a 2018 op-ed published in the Tribune: "The European financial crisis that began in early 2010 shows how markets can ignore unsound conditions for a long time — until they don't. For many years, Greek sovereign bonds traded at virtually the same yields as their German counterparts, which made no sense. Then, when the bond markets suddenly focused on the fiscal problems plaguing Greece and the other weaker countries, interest rates spiraled into crisis."
Many readers are smarter than their government: Chastened by the Great Recession in which the inability to pay mortgage debt cost people their homes, Americans have attacked private-sector debt even as their politicians raised public-sector debt. A classic example of citizens taking to heart the admonition, "Don't try this at home."
To reiterate arguments you've read here before: We write often about debt in part to counteract the popular tendency to see borrowed money as free manna that somebody else will worry about, someday. The truth is that, whether it's enforced or nominally forgiven, someone always pays.
WHERE THE BLAME LIES
When America's debt inevitably grows too onerous for taxpayers to bear or global investors to tolerate, expect a furious blame game: Why did our politicians let this happen?
That's easy: We voters didn't demand that spending not exceed revenue, that debt not be allowed to pile up like snow atop a mountain. A long line of presidents and Congresses have talked about preventing the avalanche. But we voters have let them get by on that lip service alone.
Their greatest sin thus far is abject failure to reform the debt-manufacturing entitlement programs such as Medicare (whose hospital coverage trust fund is projected by its trustees to run dry in 2026) and the Social Security retirement fund (projected as empty in 2034).
So as members of Congress and President Joe Biden ponder a massive expansion of social, educational and environmental spending, we have a request:
Whatever the final shape of your package, pay for it rather than borrow for it. Because given how you've behaved — especially since the pandemic struck — your binge of spend-borrow-repeat will be the debt of us.
The Chicago Tribune