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The COVID-19 pandemic may be nearing an end, but its economic repercussions will be felt for decades, if not longer. Over the course of a little more than one year, the United States has spent more than $5.3 trillion to combat the disease and the economic devastation it has wreaked. That massive sum is more than the U.S. government’s entire budget in 2018. Or, in other words, more than the entire GDP of every nation in the world, except the U.S. and China.
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Some of the spending was broadly supported – such as appropriating more than $800 billion for the Paycheck Protection Program to keep small businesses afloat or boosting unemployment benefits to ensure displaced workers could pay their bills at a time when many companies were forcibly shuttered. But much of the spending was wasteful or unrelated to the COVID emergency – like a private pension bailout to satiate the union lobby at a cost of approximately $100 billion, according to the Heritage Foundation, or $200 million that was spent on the Institute of Museum and Library Services. The good news is the COVID spending spree appears to be coming to an end. Vaccines are rapidly being deployed and the economy is beginning to reopen, which is already spurring economic growth and job creation. Unfortunately, the dangerous levels of red ink in Washington, D.C. will persist. INDEBTED FOR DECADES In March, prior to the passage of the $1.9 trillion American Rescue Plan Act, the
Congressional Budget Office (“CBO”) projected that the United States will reach unprecedented levels of debt in just 10 years. When that happens, the debt-to-GDP ratio will hit 107%, exceeding the historical high set during World War II. It gets worse from there, with the national debt expected to be more than double the size of the economy from 2042 to 2051. This level of debt is unsustainable and the potential repercussions are immense... As the CBO states, the projected levels of debt “would increase the risk of a fiscal crisis – that is, a situation in which investors lose confidence in the U.S. government’s ability to service and repay its debt, causing interest rates to increase abruptly, inflation to spiral upward, or other disruptions.” It should be clear to any objective observer that – following the COVID spending binge that spent trillions of dollars – the nation needs some degree of fiscal restraint. Unfortunately, instead of austerity, the Biden administration is supporting a massive tax-and-spend package. This contains a toxic mix of economically damaging tax hikes and debt-financed new
American Consequences
33 American Co s quences 3
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