Former Vice President Dick Cheney once quipped that “deficits don’t matter.”
That maxim, held by both Democrats and Republicans, has enabled the United States to amass an unbelievable amount of debt: $28 trillion and growing due to almost two decades of constant deficit spending. On the latest episode of the Drill Down podcast, hosts Peter Schweizer and Eric Eggers are joined by former Congressman and current GAI fellow Jason Chaffetz to unpack just what the national debt is, how big it is, and how we got into this hole.
One major factor driving the debt increase has been chronically low interest rates as directed by the Federal Reserve. The Fed has lowered interest rates over the years to ensure the easy flow of capital around the economy, but rates have not been restored to historic levels. This has left the Fed hamstrung in addressing future financial crises and has made the prospect of easy debt enticing to private investors and the government.
Over the long term, even if interest rates stay low, increased spending levels (unless offset with tax increases) will continue to add to the size of debt interest payments. One estimate claims the US will pay over $300 billion on debt interest in 2021 alone — almost the yearly cost of President Biden’s infrastructure plan. And if current trends hold, US taxpayers could be paying nearly $850 billion on interest alone by 2031.
Politicians may not think debt and deficits matter, but that’s because they won’t be there when the chickens come home to roost.
