USA Deeper in Debt: $8.2 Trillion, $27,000 for every man, woman and child

For the fourth time since 2002, the federal government has maxed out its credit limit. Rather than just raise it and submerge American taxpayers deeper in debt, Congress and President George W. Bush need to stem the tide of red ink in Washington, D.C.

Because the federal government continues to spend hundreds of billions of dollars more than it takes in, the U.S. Treasury has hit the $8.2 trillion national-debt limit. Treasury Secretary John Snow has urged Congress to raise the limit as soon as possible to avoid a federal default or government shutdown sometime next month.

Congress has no responsible choice but to comply. But members who care about the country’s future will use the opportunity to insist on steps to impose fiscal discipline in the nation’s capital.

Just five years ago, the national debt was $5.6 trillion. A series of deficits in the years since has pushed the debt to the current $8.2 trillion limit. That’s more than $27,000 for every man, woman and child in the United States.

The nonpartisan Congressional Budget Office has estimated that an unbroken line of annual deficits will send the national debt soaring to $11.3 trillion by 2011, about double its level of 2001. But the CBO estimate is based on unrealistic assumptions about taxes and spending. Under a more plausible scenario from the bipartisan budget watchdogs at The Concord Coalition, the debt will reach even higher — $12.2 trillion by 2011.

As the debt rises, so does the annual interest cost. The federal government is expected to spend $217 billion this year for interest on the portion of the debt held by the public. That’s money that would otherwise be available to reduce this year’s projected $423 billion deficit, or to make investments that would make the country stronger and more prosperous.

This year’s interest payment is more than the government will spend in 2006 on education, transportation, environmental protection and homeland security — combined. Almost half the interest paid will go to investors in China, Japan and other foreign countries, now owed more than $2 trillion.

Under the president’s latest budget proposal, interest payments would rise to $247 billion next year as the national debt climbs above $9 trillion. By 2015, annual interest would surpass half a trillion dollars, according to The Concord Coalition’s projections.

It’s not too late for Congress and the president to change the government’s financial future. Their predecessors did when they adopted plans to reduce the deficit to accompany increases in the national debt limit in 1990, 1993 and 1997. Another plan is badly needed now.

Congress and the president also need to bring back pay-as-you-go rules that require both spending increases and tax cuts to be financed with other spending cuts or tax hikes. Those rules helped lead to balanced budgets in the 1990s.

And Congress needs to get behind the president’s proposal for a bipartisan commission on Social Security, Medicare and Medicaid. With the impending retirement of the huge baby generation, those programs will overwhelm the budget unless both parties agree on money-saving changes.

The nation will be weaker and poorer if Congress and the president don’t get deficits and debt under control.

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