Politics

The Kavanaugh debacle and our national debt are part of the same problem

Andrew Tisch, chairman of Loews Corporation
Key Points
  • The Kavanaugh Supreme Court hearing chaos was a case study in unbridled short-termism – as the tactics employed by both parties were tailored to win the next news cycle, the next vote, the upcoming November election.
  • Likewise, the national debt is another barometer of Washington's short-termism.
  • It's a measure that quantifies just how much this generation is taking from the next one, and putting the interests of today ahead of the interests of tomorrow. 
Activists hold a protest march and rally in opposition to U.S. Supreme Court nominee Brett Kavanaugh near the U.S. Capitol in Washington, October 4, 2018. 
Kevin Lemarque | Reuters

Last month, a new stretch of road opened in southeast Pennsylvania that completed a project 62 years in the making.

The Interstate Highway System.

I was seven years old when President Dwight Eisenhower launched this ambitious effort to knit together our vast country—a project he knew would continue for decades after he was gone.

Ike, like all great leaders, was thinking long-term and well beyond his tenure. It's the absence of such thinking that is the single biggest problem in Washington: No one seems to care how what they do today affects tomorrow.

The Kavanaugh Supreme Court hearing chaos was a case study in unbridled short-termism – as the tactics employed by both parties were exquisitely tailored to win the next news cycle, the next vote, the upcoming November election. Little attention was paid to the damage being done to the long-term future of the Senate, the courts or the country.

That's a problem for tomorrow.

In an interview on CBS "This Morning," Senate Majority Leader Mitch McConnell dismissed the angst and anger over the Kavanaugh hearings, saying it will "blow over." Perhaps he is right. Weeks or months from now, we'll be on to another controversy. But the short-term thinking that created this mess will remain.

Consider a gathering crisis that is getting almost no attention in this fall's midterms: Our national debt is huge, it is growing, and absolutely no one in a position of real power cares to do anything about it. Everyone frets but no one acts.

How is it possible for our economy to be this good, and our government's finances to be this bad? Easy: The short-termers in Washington keep cutting taxes and increasing spending.

The U.S. public debt is now $15.8 trillion and growing. We all understand that's a big number, of course, but the scale is hard to grasp, since pretty much none of us have experience dealing with a trillion of anything. (For the record, a trillion is a thousand billion!)

Maybe we should stop thinking of the debt in abstract accounting terms and start thinking of it as a barometer of Washington's short-termism.

It's a measure that quantifies just how much this generation is taking from the next one, and putting the interests of today ahead of the interests of tomorrow. And that measure, unfortunately, is staggering.

Next year's deficit, which will be tacked on to our existing debt, is now projected to exceed $1,000,000,000,000. This comes at a time when the unemployment rate is lower than almost any time in 50 years, when there are more jobs open than people looking for work, and when the S&P 500 stock index has more than quadrupled in the last decade.

How is it possible for our economy to be this good, and our government's finances to be this bad? Easy: The short-termers in Washington keep cutting taxes and increasing spending.

Republicans didn't bother paying for the tax bill they passed in December 2017. And the big spending bill that passed in March—that was a bipartisan affair—hiked both domestic and military spending by about 10 percent. These two bills alone add $2.7 trillion to deficits over the next decade according to the Congressional Budget Office.

This is how we end up with a government that predicted it would borrow nearly $1 trillion during the last fiscal year. Some years the government borrows even more, some it borrows less, but it's always a lot. The upshot is a child born in the U.S. today is born with a $40,000+ share of national debt. According to a recent Bloomberg analysis, that burden will grow to $66,000 by 2026, only eight years away.

Tomorrow matters

The interest we pay on this debt is even more pernicious. Today, Uncle Sam only pays about 3 percent interest on a 10-year Treasury note. But that number can rise if our economy grows too fast, or if the people who would purchase the debt start demanding higher rates because they doubt our ability to pay it back. If the interest on Treasuries increased to just five percent—which is the average rate paid on federal debt over the past 30 years—America's annual debt service would be $825 billion by 2020. The debt service would grow significantly as the maturing debt is replaced.

That's equivalent to half the individual incomes taxes the government took in last year. It's more than the entire budget for the Department of Defense, more than ten times the budget of the Department of Education, and about 100 times the budget of the Environmental Protection Agency.

The "solutions" to our debt problems that have been trotted out this year by both Democrats and Republicans—a return to "pay go" budgeting or a balanced budget amendment—amount to little more than what former Wyoming Senator Alan Simpson calls "chest-pounding fakery" because they do little to address the real drivers of our debt.

Seventy percent of all federal government spending is of the "mandatory" variety—for programs like Social Security, Medicaid and Medicare and for interest on the debt—that is basically on auto pilot and grows more each year if Congress does nothing. Defense spending adds another 22 percent to the budget.

As a consequence, the discretionary part of the budget—which funds research into new medicines, technologies and big, bold national projects like President Eisenhower's Interstate Highway System—keeps shrinking. So too, does the possibilities for what America can be in the years to come.

We need leaders who care about the future—our children and grandchildren—and act as if tomorrow matters.

Andrew Tisch is the chairman of Loews Corporation and a cofounder of the national political reform group No Labels.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

WATCH: Does U.S. debt matter?

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Does U.S. debt matter?