It makes sense that the federal government is stepping in to provide financial relief to the millions of citizens facing economic ruin due to the coronavirus crisis and subsequent government restrictions on activity. But what’s unconscionable is the fact that, thanks to the way Congress spent the last decade ignoring any sense of fiscal responsibility, coronavirus relief must come at the cost of further indebting future generations and dimming the outlook of our financial future.
It’s not the $2 trillion price tag on the coronavirus relief bill, passed Wednesday evening by the Senate, that does this in and of itself. One big spike in government spending during a crisis isn’t, or at least shouldn’t, be the end of the world. The way it’s supposed to work is that during times of growth and prosperity, such as the last decade or so, lawmakers are supposed to rein in budget deficits. That way, they will later have the leeway to borrow and spend during a crisis without completely torpedoing the national debt.
Instead, our leaders decided to just cash out at future generations’ expense, even during times of prosperity, running up massive deficits and adding a whopping $8.5 trillion under former President Barack Obama, topped off with several trillion more so far from President Trump during his first term. This was the government equivalent of parents going on a spending binge with credit cards they’ve taken out in their children’s names.
As Reason’s Eric Boehm explained, we had every opportunity to do the responsible thing:
The past decade was a good opportunity to do that. Great, even. Since the last recession officially ended in the third quarter of 2009, the United States enjoyed 42 consecutive quarters of solid if unspectacular economic growth through the end of 2019. That’s the longest run of uninterrupted growth since government economists began tracking the business cycle in the 1850s, far outpacing the average economic expansion of 18 months. Employment has increased by 12 percent, the jobless rate reached record lows, and America’s gross domestic product (GDP) has increased by more than 25 percent.
Now, the bill has come due. It’s hard to say for sure, but it looks like the federal government will run at least a $3 trillion deficit this year due to both the preexisting profligate budget and the trillions more from this relief bill. If additional relief or stimulus packages are passed, which looks likely, the total tab passed onto future generations could even reach $4-6 trillion.
What does this mean?
Well, it’s newly fashionable in some circles to pretend that deficits and debt don’t matter, but this just isn’t true. Massive levels of government debt are a drag on the economy. Plus, they will require increasingly enormous levels of taxation just to pay the interest each year and crowd out private sector investment. My generation is going to get stuck with all these fun consequences and more, thanks to lawmaker negligence and fiscal irresponsibility.
We do indeed need a strong government response to the coronavirus crisis. And yes, that involves spending money, lots of it, no doubt. But this saga should serve as a painful reminder that we must demand more fiscal responsibility from our elected officials during times of growth and prosperity — so we don’t screw over future generations the next time a crisis comes around.