One of the most pressing issues facing our nation these days is the federal government’s massive budget deficit. The deficit and its implications for the already prodigious national debt have been front and center in the national discourse as a $315 billion surplus in 2001 has gradually transformed into an $885 billion deficit in 2013 under the weight of tax cuts, healthcare policy changes, and spending tied to the War on Terror, Wall Street “bailouts,” the 2009 economic stimulus, and the oft-forgotten interest continuing to accrue on amounts already owed. With each looming debt ceiling, fiscal cliff, and sequester, the unfortunately partisan debate gains vigor, begging the question of whether we’ll find a solution before we run out of nifty nicknames for the various kick-the-can crises encouraged by our infighting and indecision.
There are plenty of proposed solutions out there – both practical and inane – coming from a variety of sources – from the Brookings Institute to Esquire Magazine’s Commission to Balance the Federal Budget. But evaluating the efficacy of a potential remedy, of course, necessitates making a proper diagnosis first.
So, what is the current state of the federal government’s debt and deficit?
Scoping the Problem
With so much talking-head, blogger-fueled misinformation and white noise out there concerning the budget deficit, it’s no surprise that most people either don’t know or don’t really care anymore what the latest facts are. For example, while 62% of Americans believe the deficit is growing this year and 28% think it will hold steady, according to a Bloomberg poll, only 6% were on the money in saying the gap is actually narrowing.
The annual divide between government spending and government revenue actually receded by $300 billion during President Obama’s first term. It currently stands at $845 billion for fiscal year 2013 and is expected to fall to $430 billion next year.
Nevertheless, the national debt (and no, I’m not referring to Washington Nationals SP Ross Detwiler’s Twitter handle) has continued to grow (actually, much like the 27-year-old lefthander, who’s turning into one of the best young pitchers in MLB). As a nation, we’re currently over $16.8 trillion in the hole – roughly 191% more than was owed in April of 2000, 116% more than in April 2005, and 7% more than this time last year, according to data from the Treasury Department.
Those figures are certainly staggering, but they seem even more worrisome when you consider the following:
- $1.22 trillion: The amount of U.S. debt owned by China, according to Treasury data (~7% of total amounts owed).
- $191.9 billion: The amount of interest that accrued on the national debt during the first six months of fiscal year 2013 (which began in October).
- $3.85 billion: The average amount by which the national debt has grown each day since 2007.
Simply reducing the budget deficit isn’t going to cut it. Drastic measures must be taken to not only balance the budget, but also pay off much of what we already owe. After all, a revamped personal budget could help indebted consumers lead a financially sustainable lifestyle, but if they only ever send creditors minimum payments, they’ll never reach debt freedom.
But while you can use a credit card calculator to figure out what monthly payments you’ll need to make in order to reach zero balance by a certain time and even identify which credit card will save you the most on finance charges, things are a bit more complicated when it comes to the federal budget.
So, what can we do?
Proposing a Solution
As mentioned previously, there’s no shortage of espoused fixes to the country’s money problems. Some rely heavily on spending cuts, while others are more revenue-focused. Some come from reputable sources, others from amateurs. Which approach is “right” or “best” is obviously a matter of great debate.
In order to gain a bit of added insight into the matter as well as perhaps advance the overall discussion, we asked a number of experts for their take. More specifically, we posed the following question to professors of economics, public policy, and finance from many of the country’s leading institutions of higher learning:
If you could make one policy change to solve the federal government’s deficit problem, what would it be?
Here’s what they had to say about proposed solutions and the likelihood they’ll actually be adopted:
Ask The Experts
Eying an Outcome
Whatever option(s) policymakers decide to pursue, it’s clear that our budget deficit issue isn’t going to get solved overnight. After all, if we can’t even agree on a budget for this fiscal year, how can we expect to implement the types of sweeping changes that are, by all accounts, necessary?
We can’t. The political climate has to change first. That will take time and a lot of work.
In the meantime, tell us what you think the government should do to correct the budget/debt mess? Just remember to keep the partisan politics to yourself and instead focus solely on constructive suggestions!
Image: Sergey Nivens/Shutterstock