Yesterday the Congressional Budget Office released its annual estimate of federal borrowing. http://www.cbo.gov/publication/45010 By assuming that Congress will allow budget cuts in the near future than it has been unwilling to make today, this forecast understates the use of debt to pay for routine federal expenses. For example, the CBO assumes that fees paid to physicians for Medicare will drop by 24% later this year and that–beginning October 1, 2015–federal spending on defense and domestic programs will adhere to budget ceilings that Congress suspended up until then. And, of course, these projections envision no future emergency use of debt for traditional purposes such as war and recession.
Even with those assumptions, however, the CBO projects that current policies will never result in a balanced federal budget. As a result, future federal services will become more expensive, since more of each tax dollar must be used to pay for debts incurred for past services. Consider the budget for fiscal year 2020. This fiscal year interest the CBO estimates an interest expenses of $425 billion, 31 cents out of each dollar of personal income tax revenue of $1.381 trillion. By 2020 the CBO estimates that the federal government will pay $905 billion in interest, 44 cents out of each dollar of personal income tax revenue totaling $2.051 trillion.
The American Dream has been based on a willingness to work for greater opportunities for future generations. That ideal is undermined when federal leaders use debt to disguise the cost of defense, medical services and other federal programs.