As COVID-19 continues to migrate from hotspot to hotspot across the United States, it is becoming clear that even when new cases start to plateau and states look toward planning for staged reopenings, life will not be the same for a long time.
Worse still, the prospects of a “V-shaped” economic recovery are looking increasingly fanciful. As National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci summarized, “there’s not going to be like, a light switch that you turn on and off and say, ‘On this date, America will resume its normal activities.” The Bulwark Executive Editor Jonathan V. Last captures this new reality best, writing “you can ‘reopen’ the country all you want. You cannot force people to act as though there is not a pandemic.”
The economic pain wrought by the virus will see no easy end until people feel safe enough to carry on life as close to before the pandemic as possible. These substantial obstacles to any attempted economic recovery bring us to the long-simmering crisis of the national debt.
It is no secret that our-now $24 trillion national debt will be like a ball-and-chain affixed to any post-virus future, especially considering how the virus also brought upon a 15-20 percent unemployment rate, a figure that exceeds the 2008 financial crisis fallout and inches close to the height of the Great Depression. This has resulted in $2.5 trillion in federal spending that has driven up the expected 2020 deficit to a record-smashing $3.7 trillion.
Make no mistake — the unprecedented spending on relief checks, unemployment boosts, and small business loans were vital emergency measures to blunt the virus’s economic blow. Without it, the unemployment rate would be even more staggering.
Even so, the past decade of fiscal recklessness will give us a far greater fiscal limp than we had going into the crisis and worsen the economic futures of countless young Americans. Instead of spending the last decade of boom times getting our budget in order, we drove up the national debt from $13 trillion in 2010 to $23 trillion in 2020, boosting the debt-to-GDP ratio over 100 percent. The last decade of reckless policymaking kept our country’s finances on a path of never-ending deficit growth.
This failure to act now puts the post-coronavirus economy in a bind. Imagine if we were entering this period with a manageable deficit and a debt close to our historic average of 48 percent. The massive $2 trillion+ response could easily be absorbed.
Instead, we are entering with our fiscal future in already dire straits, and the ongoing debt accrual will weigh heavily on any potential post-COVID recovery process.
Political economist Nicholas Eberstadt paints a stark picture of the stakes. “Post-pandemic economies around the world,” Eberstadt writes, “will need all the productivity surges they can squeeze out of technological and organizational innovation […] for they will almost certainly be saddled with a far higher burden of public debt than today.”
This is not a concern off in the distance either. A recent analysis from the Committee for a Responsible Federal Budget advises that “putting long-term deficit reduction measures in place sooner rather than later would allow policymakers to phase in changes more gradually and give those affected more warning and ability to prepare.”
New York Times columnist Andrew Ross Sorkin puts a finer point on this, calling attention to how “we have lurched from bailouts to wars to rescue packages to bailouts again, and we never fill up our coffers during the best of times to pay for any of them.” He chillingly concludes that “at some point, our debt will become the crisis that we can’t end with more money.”
Constant charging to the national credit card when we were in a place to pay down the balance now leaves us in a weakened position for when the next national tragedy hits. Future generations have the most to lose from this carelessness; we will both be expected to pay down the current emergency response and have no backstop should an unpredictable crisis of this scale happen again. Indeed, the trigger for the next crisis could be the mountains of debt we have accrued. It’s time we heed the constant warnings from non-partisan experts and prepare now.
