Debt deniers ignoring the truth

Story highlights

  • U.S. national debt now tops $19 trillion, according to Treasury figures
  • Senator Dan Coats: This is a problem requiring immediate action

Sen. Dan Coats, R-Indiana, is chairman of the Joint Economic Committee. the views expressed are his own.

(CNN)Much has been made about a recent TIME cover story that boldly declared that every American man, woman and child owes $42,998.12 to pay off our national debt.

The article's author, James Grant, framed the federal debt as a burden to be paid by every U.S. citizen, personalizing an otherwise abstract and impersonal statistic. But as Grant himself admits, this visualization tool does not even include intragovernmental debt, which would bring the amount owed per citizen closer to $60,000.
    Dan Coats
    Critics of Grant's piece quickly attempted to dismiss our $19 trillion national debt as a non-issue or a problem easy to solve, as outlined in a Joint Economic Committee report this week. Yet denying that the current size or trajectory of U.S. federal debt is a problem is both dishonest and insulting to the American people. Indeed, despite the claims of some critics, we cannot continue to discount the short-term and long-term effects of our country's debt burden.
    These "debt deniers" make three main assertions that must be refuted.
    1) Debt deniers say our national debt is not that large, and that the deficit is sustainable.
    When President Barack Obama took office, our national debt stood at $10.6 trillion. It now tops $19.2 trillion and is eating up a historically large share of the gross domestic product (GDP). Federal debt is roughly double its historical average of 39% of GDP and set to outpace economic growth over the next decade.
    According to the nonpartisan Congressional Budget Office, publicly held federal debt is projected to rise to 85.6% of GDP by the end of the next decade, and to 155% within three decades -- the highest percentage ever recorded in the United States. Even the Obama administration's Treasury Department explicitly noted in its annual financial report, "The continuous rise of the debt-to-GDP ratio after 2025 indicates that current policy is unsustainable."
    This is a large, dangerous and growing problem.
    2) Debt deniers assert there is still time before policymakers need to make drastic decisions.
    The CBO estimates that if Congress aims to simply maintain the current debt-to-GDP ratio for the next 25 years, revenues would need to increase by 6% annually, or noninterest spending would need to fall 5.5% annually. Attempting to bring publicly held federal debt back to its historical average would require 14% annual revenue increases or 13% annual noninterest spending cuts.
    Can policymakers reprioritize federal spending without restructuring current programs? Not really. Within the next decade, more than 98% of federal revenue will be consumed just by mandatory spending and interest payments on the debt. That does not include spending on other important priorities like national defense and medical research.
    With spending on the rise, the longer it takes for policy action, the more significant the changes must be. This is a problem requiring immediate action.
    3) Debt deniers claim that reducing debt by slowing spending growth could hurt economic growth.
    High levels of publicly held federal debt as a share of the economy negatively affect the private sector. The 2016 Economic Report of the President recognized this threat in other major advanced economies, but the report fails to consider the potentially destructive consequences of high federal debt in the United States. Rising federal debt dampens economic growth, burdening future generations with diminished opportunities and a larger debt burden to pay off.
    Painting our national debt as a non-issue is a disservice to the average American because doing so makes it more difficult for our elected representatives to come together in bipartisan agreement to make credible, lasting fiscal reforms.
    With all this in mind, Congress should heed the overall warning of TIME magazine's cover story. The U.S. federal debt is a significant problem, and it must be addressed soon. There is no denying this reality.