The White House is touting the news that the federal deficit for fiscal 2005 will be "well below" its February forecast of $427 billion, but it is a safe bet that it will still exceed $350 billion and adding more than a third of a trillion dollars to the national debt in one year is nothing to brag about.
Of course, any reduction in the deficit is good news, and the White House gets bragging rights to projected increases in tax revenues that are attributable to a stronger U.S. economy. The president's supporters are already beginning to suggest that a stronger economy shows that deficits don't really matter. We can grow our way out of deficits and easily deal with the national debt, they say.
Interestingly, these same people apparently don't believe the economy can grow in such a way as to solve the shortfall in Social Security that will start in a decade or so. And the Social Security Trust Fund -- treasury bills that were bought with surplus Social Security withholding dollars over the years -- represents only a fraction of the national debt.
This nation cannot painlessly grow itself out of the hole, and people should continue to be concerned about the national debt, which is now approaching $8 trillion. That represents a debt of more than $25,000 for every many, woman and child in the United States and it is growing at the rate of more than $1 billion a day.
Growing like Topsy
In 1980, the debt was slightly less than $1 trillion. By 1992, it had grown to $4 trillion, a 300 percent increase. By 2000 it had grown to $5.7 trillion, an increase of 42 percent over eight years. It now exceeds $7.8 trillion, an increase of 37 percent in less than five years. The only relatively bright spot in this quarter century of a burgeoning annual deficits was the five-year period between 1995 and 2000, when the debt grew from $5 trillion to $5.7 trillion, an increase of 14 percent. But even that comparatively modest increase of $700 billion is more than the entire national debt for any year in the nation's history up until 1977.
And while the White House suggests that a deficit that is tens of billions of dollars lower than had been projected is a harbinger of better things to come, federal spending will explode sometime after President Bush leaves office because of mandated spending on entitlements like Medicare, Medicaid, prescription drugs and Social Security.
On top of that, President Bush continues to push his proposal to privatize part of Social Security, which would add at least $1 trillion, and more likely twice that, to the national debt.
Any reduction in the deficit is good, but it would be bad if a marginal and temporary dip in the annual deficit lulled people into believing that this nation's debt is anywhere near under control.