Recommendations of the Editorial team
Life is a battle between the urgent and the important. In the maelstrom of our increasingly absurd everyday life – fueled by algorithm addiction and the pompous imposter in the White House – What’s important is always buried by a tidal wave of screaming tweets and self-inflicted crises.
That’s why you probably missed an inconspicuous but significant milestone our country reached last week: America’s debt exceeded 100 percent of gross domestic product.
So what, you say? Sounds dry and technical. It actually really fucking matters. It means that America’s accumulated debt — our reflex to borrow from others to pay for what we want and need — is now larger than the entire U.S. economy. It doesn’t take an economist to see that this is bad and, by definition, unsustainable.
A historical turning point
The last time the deficit exceeded 100 percent of GDP was during World War II. When countries breach this threshold in normal times, it is a recipe for decline – and has accompanied the fall of republics and empires alike.
What is particularly bitter is that America had worked its way out of this hole a quarter century ago – with a balanced budget, no deficits and a projected surplus. President Bill Clinton was able to declare without much fanfare at the time: “America can now turn off the debt clock, which has long symbolized the failure of our leadership, and turn on the surplus clock, a symbol that all Americans can look at with pride.”
The formula is instructive and has the simplicity of pure mathematics: We increased revenues – taxes on the wealthy – in the first Clinton budget; we cut spending, thanks to the Republican Congress that came into power; and the American Internet boom caused the economy to grow. Zero deficit put us on track to reduce debt.
How the surplus was squandered
This was a monumental achievement—the political outcome that fiscal conservatives and independent populists like Ross Perot had been demanding for nearly a decade. It coincided with a unipolar moment following the fall of the Soviet Union. America was on the right track and in pole position. Then we lost it.
George W. Bush declared that the proper place for any budget surplus was in the pockets of American taxpayers. Even before 9/11, he passed tax cuts that put us back on the path of growing deficits and debts – compounded by the wars in Iraq and Afghanistan, which drove the deficit from zero to $1.2 trillion. As Vice President Dick Cheney famously said, “Deficits don’t matter—politically speaking.” The last word is sometimes omitted, but is crucial. Because deficits do play a role in reality. Politically, however, they are somehow a mood killer – which is why Republicans always rediscover their fiscal conservative credibility when they are in opposition.
This is a lesson we’ve learned time and time again, so say it with me and never forget it: Republicans only care about deficits when there’s a Democrat in the White House.
Trump and the debt spiral
The Tea Party movement, which followed George W. Bush’s big-government conservatism, railed against Barack Obama after he inherited an economy in free fall. Obama actually cut the deficit in half and allowed the economy to grow far faster than his predecessor.
Republicans responded in 2016 by electing the self-proclaimed “King of Debt” Donald Trump — a man who brags about not paying bills and taxes and sells it as evidence of business savvy. He also holds the dubious distinction of being one of the few people on earth to have managed to bankrupt a casino – four times. In his first term, Trump doubled the deficit and caused the U.S. debt to grow by more than $8 trillion, a 40 percent increase in four years.
In 2021, President Biden took over an economy in decline caused by a pandemic. He passed economic stimulus and infrastructure packages that caused debt to grow by 25 percent in four years – exacerbated by rising interest rates and inflation.
Where Trump is taking America
A year and a half into Trump’s second term, it is clear that combined Republican control of government has further ballooned the deficit and debt while simultaneously slashing health care for millions of people. Trump is transforming America into a country where the super-rich get richer and corruption is legalized – at least for now, with the promise of pardons for anyone who comes even close to the Oval Office. Wall Street is booming while Main Street is suffering. And everyone sees the AI tsunami coming – which promises higher corporate profits and increased efficiency while exploiting working people for their existence.
I don’t want to paint things black. I am an optimist by nature. Americans are at their strongest when they innovate their way out of problems. I believe that we will innovate forward again this time. But we can’t pretend that we can permanently outwit gravity. Deficits and debts have consequences – no matter who is president.
This does not mean that America is inevitably headed for decline. But decline is a choice – and Donald Trump has accelerated us in that direction. Despite all the noise, he has set America on a course of further fragmentation and destabilization.
A way out of the hole
We can work our way out of this if we have the wisdom to work together again across the aisle: raise revenue, cut costs by modernizing government, and unleash American innovation so we can grow our way out of this hole. But if we don’t do that – if we think we can just spend endlessly while permanently cutting taxes – we will find ourselves in a world in which we are debtors instead of creditors, vulnerable to attempts to replace the US dollar as the world’s reserve currency. That would be a world in which we assume an unfamiliar weakness – and that is never the path to greatness.
