Maya MacGuineas: How Much the Growing Debt Costs U.S. Households
Maya MacGuineas, President of the Committee for a Responsible Federal Budget, wrote a commentary that appeared in the Wall Street Journal Washington Wire. It is reposted here.
Simply put, 2014 has not been a good year for the debt. While the short-term deficit improved–after growing 800% following the financial crisis–policymakers still added more than $100 billion to the debt. Because billions are hard to conceptualize, it is worth looking at this in terms of debt per household.
First, Congress undid the one real reform in last year’s Murray-Ryan budget deal: replacing reforms to military pensions with a budget gimmick, losing $7 billion in real savings in the process. After interest, that’s $65 per U.S. household. Lawmakers also paid for highway funding partially with gimmicks, adding an additional $60 to every household’s share of the debt. Then there was the unpaid-for increase in veterans’ health care ($100), the “doc fix” Congress paid for with a gimmick ($50), and emergency spending to fight Islamic State and Ebola that lawmakers didn’t even try to pay for ($105).
When Congress finally passed funding for the fiscal year (2 1/2 months after it started), lawmakers slipped in a further $315 of debt that each household would have to bear, using phony offsets, unjustified cap exemptions, and hidden spending. And this week, lawmakers reinstated a number of expired tax breaks that will cost every household $440.
Actually, policymakers had tried to borrow much more. Democrats wanted to borrow to pay for unemployment benefits that would have cost $180 per household and a permanent doc fix that would have run $1,700. House Republicans had pushed for permanent tax breaks costing $7,850 per household, with some Senate Democrats, including leadership, apparently willing to go along with some $4,200 of it. During the summer, there was a bipartisan Veterans Affairs reform bill that would have cost $4,750 per household. In addition, House Republicans, with some Democratic support, passed legislation rolling back more than $1,000 worth of pay-fors in the Affordable Care Act, including repealing the tax on medical devices and changes to the employer mandate.
And this trend may continue next year.
Already there has been talk of another effort to repeal the medical-device tax, which would cost $250 per household. When the doc fix expires in March, many policymakers hope to dump it once and for all; that would cost U.S. households $1,700. When the Highway Trust Fund runs dry in May, legislators could deficit-finance a transfer of as much as $1,500 for every household or double-count savings from tax reform into that fund.
Meanwhile, calls are growing to get rid of some or all of the sequester. If the defense portion of the sequester were repealed, that would run $4,300 per household. Repealing the entire sequester would cost $8,300. And this time next year, the tax extenders will come up again. Renewing them would cost households $440 for another year or, if the breaks are made permanent (as many wanted to do this year), $8,100.
These policies could be paid for. But the path of nonresistance is to borrow instead. While billions and trillions are hard numbers to grasp, American families should not be duped into thinking that the massive run-up in the debt won’t ultimately affect their own bottom line.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.