The Debt: Mission Unaccomplished

WASHINGTON -- Oh, the debt. Yawn. How passe. How 2009.

Once, President Obama held a summit on fiscal responsibility (2009). Once, he gave an entire speech devoted to the subject (2011). Once, his State of the Union addresses (2010, 2011, 2013) were studded with double-digit references to the problem of sky-high deficits and lingering mountains of debt.

Now, the topic receives just glancing mention, a clause ("shrinking deficits") in a series of presidential back-pats, and a refutation of warnings of Apocalypse Soon.

"At every step, we were told our goals were misguided or too ambitious; that we would crush jobs and explode deficits," Obama said in this year's State of the Union address. "Instead, we've seen the fastest economic growth in over a decade, our deficits cut by two-thirds, a stock market that has doubled, and health care inflation at its lowest rate in 50 years."

He didn't say "mission accomplished," but that was the unmistakable point.

Except the mission isn't, as the Congressional Budget Office and its departing (Democratic) director, Douglas Elmendorf, usefully pointed out this week in the CBO's annual report on the nation's finances.

Yes, the presidential math is correct: The deficit has shrunk from its jaw-dropping heights ($1.4 trillion in 2009) to a projected $468 billion this year. A pile of money, to be sure, but eminently manageable as a percentage of the economy -- 2.6 percent, about the historical average, compared with 9.8 percent in 2009.

But this column isn't about the deficit -- it's about the debt, the lingering, and potentially dangerous, hangover of years of spending beyond our means, plus the hammer-blow of the financial crisis.

The CBO put the ugly picture of the trajectory of federal debt on the cover of this year's report, and for good reason. At the end of this fiscal year, debt held by the public (the most relevant measure of federal debt) will be 74 percent of gross domestic product.

That is, as the CBO notes, "more than twice what it was at the end of 2007 and higher than in any year since 1950." Scarier still, it's getting worse, not better; beginning in 2018, deficits start to grow again. As a result, "by 2025, in CBO's baseline projections, federal debt rises to nearly 79 percent of GDP."

This is a good time to pause, and give credit. First, for the deficit reduction already, painfully accomplished -- $4 trillion in spending cuts and tax increases. Some of the cutting (the blunt instrument of sequestration) is dumb, and the promised trims may be unsustainable. Still, that's not chump change.

Second, for the slower growth of health care costs, the biggest driver of long-term deficits. In 2013, according to statistics compiled by Medicare actuaries, spending grew 0.5 percent less than the previous year, the result of lower costs in both private health insurance and Medicare. The CBO has concluded that "the slowdown in health care cost growth has been sufficiently broad and persistent" to reduce significantly its spending projections for federal health care programs.

Nonetheless, the future is not pretty. Obama, circa 2011, helped explain why. "We have to get back on a path that will allow us to pay down our debt," he said. "Even after our economy recovers, our government will still be on track to spend more money than it takes in throughout this decade and beyond. That means we'll have to keep borrowing more from countries like China. That means more of your tax dollars each year will go toward paying off the interest on all the loans that we keep taking out."

This year, thanks to historically low rates, interest payments on the debt are projected to total $227 billion. By 2025, according to the CBO, that price tag will more than triple, to $827 billion.

Even aside from the opportunity costs of devoting so much of the budget to interest payments, there are, the CBO warns, other "serious negative consequences for both the economy and the federal budget." One is that the government's insatiable appetite for debt will raise the cost of private-sector borrowing, lowering economic growth.

Another is that, unlike at the start of the financial crisis when debt amounted to just (!) 43 percent of GDP, the overhang of already huge debt could "restrict policymakers' ability to use tax and spending policies to respond."

The administration, Congress and the country should be talking about the hard choices necessary to deal with this problem. Instead, we see calculated indifference and political grandstanding, including by a president who ought to know better.

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Ruth Marcus' email address is ruthmarcus@washpost.com.