This post originally appeared at Institute to Reduce Spending.
President Trump has a golden opportunity to appeal to the fiscal hawks who were wary about how he would address the $20 trillion national debt. With large cuts to the EPA, Dept. of State, and Dept. of Labor—among other things—things look optimistic for fiscal conservatives. However, the largest portion of the budget, mandatory spending, remains untouched. Mandatory spending accounts for nearly two-thirds of the entire budget, so drastic cuts to other departments are encouraging but ultimately miss the root of the debt problem.
Don’t get us wrong: It’s great that President Trump is recommending these cuts as well as reorganizing agencies within the executive branch to increase efficiency, but refusing to even discuss reforms to Social Security, Medicaid, and Medicare means turning a blind eye to the biggest part of the iceberg that sits just under the surface. Even more troubling, increasing Pentagon spending goes to offset the other cuts, leaving taxpayers in the same position as before. After you add in expected tax cuts, the case for spending reform continues to grow. Even ignoring the possibility of economic unrest or fiscal crises down the road, rising deficits and a debt so large come with real concerns today.
Just last week the Federal Reserve decided to raise interest rates, which is a reminder that holding on to a massive debt and large interest payments is a real risk that could be closer than many like to think. The Congressional Budget Office estimates that the federal government’s net interest costs will go from 1.4 percent of GDP in 2016 to 3.0 percent of GDP in 2026 and to 5.8 percent of GDP by 2046—and if interest rates continue to rise, so could this percentage.
This is extremely detrimental to our fiscal security and becomes an even bigger problem when paired with ignoring mandatory spending. With another debt limit hike coming soon, Representatives should look for meaningful ways to restrain government spending. It is imperative that the spending problem in Washington gets addressed, and small cuts are worth celebrating but will not fix the problem. With a united government, there is a real opportunity for meaningful spending reform – which Representatives ought to seek now more than ever, if we want to ensure America’s continued prosperity.