When the balloon pops: Inflating our debt and undermining our security

As Published in the Washington Times, May 18, 2022.

Twelve years ago, Joint Chiefs of Staff Chair Adm. Michael Mullen famously warned, "the most significant threat to our national security is our debt." At the time, the nation's federal debt was roughly $13.5 trillion. Congress and our government have completely ignored Mr. Mullen's warning; our national debt has now surpassed $30 trillion and is growing exponentially.

China now owns $1.1 trillion of that debt, the second-highest total among foreign sovereign governments, a clear threat to our national security. If current trends continue, that number will increase to $1.7 trillion over the next decade.

Mr. Mullen recognized the tangible risks rising deficits have on our nation. Every dollar spent servicing our debt, meaning dollars spent paying the interest on the debt already accrued, are dollars not spent on funding national priorities. Currently, the Congressional Budget Office estimates that we will pay an average of $543 billion per year on just the interest for our nation's $30 trillion-plus in national debt.

President Biden's Fiscal Year 2023 Budget only worsens the problem. Under the president's proposed spending plan, interest payments would jump to an average of $756 billion per year, meaning $2 trillion more in total interest payments over the next 10 years than currently projected. Our country would be paying over $1 trillion in interest payments to service the debt by 2031. To put that in perspective, by 2031, we would pay 1.5 times our current Medicare outlays and 1.4 times our current defense budget on interest payments. As Undersecretary of Defense Comptroller Michael McCord agreed during our discussion at the House Budget Committee, the increasing burden of mandatory interest payments threatens to crowd out discretionary spending priorities, such as our defense budget.

Mr. Mullen warned us that our debt would soon reach a point where we spent more paying off interest than funding our military, risking our national security. Under the president's budget, that warning will be proved true in 2029. Given that China owns an increasing amount of our debt, those interest payments will directly fund the interests of an economic, and perhaps military, adversary.

Unfortunately, rampant, irresponsible federal spending has compounding consequences on our economy.

Mr. Biden and House Democrats are wreaking havoc on our economy and fueling inflation. Spurred by the $1.9 trillion American Rescue Plan Act, the inflationary impacts of which were forecasted and have been confirmed, our government ran a $2.8 trillion deficit in 2021. The results of this massive spending influx by the federal government have been immediate and drastic: The Bureau of Labor Statistics reports that the consumer price index for all items rose 8.3% over the past year, near the highest level in over 40 years.

Inflation not only harms our economy in the immediate future but also has long-term impacts on the cost of servicing our debt. In March, in an attempt to tamp down Mr. Biden's inflation, the Federal Reserve Board raised benchmark interest rates by 0.25 percentage points. On May 4, the Fed raised interest rates an additional 0.50 percentage points, the largest single increase since 2000. These rate hikes will have a ripple effect across our economy, including on servicing our national debt. As inflation persists this year, the Fed is expected to continue to raise rates at least 5 more times this year, with rates expected to surpass 1.9%.

The Committee for a Responsible Federal Budget, a nonpartisan nonprofit research organization, reports, "If interest rates are 50 basis points (0.50 percentage points) higher than projected, average annual interest costs would increase by $94 billion per year." Even higher interest rate hikes will have even more devastating impacts. If interest rates were to exceed CBO's projections by 2 percentage points each year, similar to the Fed's expected actions for this year, our nation could spend an additional $3.7 trillion servicing our debt over the next decade.

This does not even factor in expected spending increases under Mr. Biden's budget — this is just the impact of what has already been spent. My Republican colleagues on the House Budget Committee have prepared an analysis titled "The Consequences of Higher Interest Rates to the Federal Budget," which provides an even grimmer outlook on the long-term impacts of rate hikes on our nation's fiscal strength.

The Biden administration's spending increases the debt from the outset, and the Fed's response to control inflation by raising rates balloons the cost of our debt even more. Our national security will falter. America will be forced to fund China's rise. Generations yet to be born will be paying the price for Mr. Biden's inflation. It is long past time for Congress to step up and rein in this out-of-control spending and inflation.

• Rep. Lloyd Smucker represents Pennsylvania's 11th Congressional District and serves on the House Committee on the Budget and the House Committee on Ways and Means.