As Congress and President Biden debate yet again how much to spend in response to the COVID-19 pandemic, one detail is missing: How are we going to pay all this borrowed money back?
Since the pandemic began, the federal government has provided $3.4 trillion in COVID-19 relief, which is equal to $10,300 for every American, according to the New York Times.
Biden has proposed another $1.9 trillion that, among other provisions, would send $1,400 to adults making $75,000 or less. This would follow the $600 checks many of us received in December. The package also includes unemployment benefits, rental assistance, money for state and local governments, and $170 billion for schools, colleges and universities.
Whatever the final amount is, Arkansas will get a piece of the pie. Its previous pieces, in fact, are why the state is running a budget surplus this year.
It’s in Gov. Asa Hutchinson’s interest for the pie to be larger so that the state’s piece will be larger too. But, as reported by the Arkansas Democrat-Gazette, Hutchinson told Biden during a White House meeting last Friday that state and local governments could make do with less than had been proposed.
Hutchinson said he told Biden that the last time the budget was balanced was two decades ago, when Hutchinson was in the House of Representatives and Biden was in the Senate.
Whatever we spend now will be added to the national debt, which as of February 9 had reached $27.85 trillion, or more than $84,000 for every American. On March 15 of last year, it was $23.5 trillion.
I’ve written dozens of columns about the national debt starting in 1992, when it was $4 trillion. That was the amount that had accumulated from the 1830s until then. For comparison, the debt has grown more than $4 trillion during the 11 months since this pandemic began.
The future does not look much brighter. The Congressional Budget Office last Thursday released projections that this year’s budget deficit will total $2.3 trillion. The debt held by the public, which is the part that doesn’t include what the government has borrowed from itself, will grow $13.6 trillion by the end of 2031. And that amount could increase if more is spent on COVID-19 relief and if lawmakers extend expiring tax cuts passed during the Trump administration.
The national debt keeps expanding because there hasn’t been a mechanism to force or at least encourage a balanced budget – like Arkansas has with its Revenue Stabilization Act – and because lawmakers never pay a political price for all this red ink. They just keep growing the debt, and we just keep voting them back in.
Even I would agree that policymakers must do what’s necessary to defeat the virus and prevent an economic collapse, and that includes borrowing and spending.
But instead of simply acting as if it’s all free money, this latest stimulus package should be structured like bank loans.
When we borrow money, the bank puts us on a schedule to pay it back, or else we face consequences such as losing our house and seeing our credit rating suffer. If we’re having trouble making those payments, then we know we must increase our revenues and/or decrease spending elsewhere.
The same should be done here. Somewhere in the legislation should be an amortization schedule that kicks off in a couple of years when the pandemic presumably will be over and the economy will be recovered. It should include automatic spending cuts and/or tax increases if lawmakers don’t meet budgetary targets in other ways. Those cuts and increases could be softened or postponed automatically if the economy is not meeting certain thresholds.
We should so this because if we don’t pay back this money, then future generations, who had no say in the matter, will have to do so – or they will have to default, which will be bad for them, too.
If there ever were a time to borrow, this pandemic is it. But there also must be a time to pay back.
How do we ensure we actually do that for a change? Have a plan. If we’re willing to do that when we borrow from a bank, we ought to do it when we borrow from future generations.
Steve Brawner is a syndicated columnist who focuses on Arkansas politics. He is a regular contributor to Talk Business and a frequent panelist on Arkansas PBS’s public affairs show, “Arkansas Week." He publishes a blog, independentarkansas.com . Email him at firstname.lastname@example.org . Follow him on Twitter at @stevebrawner .