It’s said that a person often meets his fate on the road he took to avoid it. Washington, D.C., has spent most of the last half-century using the federal debt to prove that maxim.We’ve constructed elaborate detours to avoid a fateful debt crisis. We’ve tried everything. Everything, that is, except the one real solution: cutting federal spending and reforming runaway entitlements. On Aug. 18, every one of those detours led us to the same milestone: $40 trillion in debt, $296,000 per household.
The first detour came from those who insist we have a revenue problem. But federal revenues as a share of gross domestic product are roughly at their 50-year average. People are not undertaxed. Washington is overspending.Attempting to close the gap with higher taxes would create an economic tailspin, evidenced by our own experience when Congress raised taxes, and in other nations that attempted to tax their way to a balanced budget.The second detour was leaning on the rest of the world. Roughly $9 trillion of federal debt is held abroad today. With dollar assets considered the safest on earth, foreign investors were always willing to finance our irresponsibility. Left alone with our own budget, we would have hit an inflation crisis years ago. The dollar’s status as the global reserve currency keeps buying us time — and we keep wasting it.(Getty Images)
