Today's bloated deficit will lead to tomorrow's vacant job market

While few in Washington appear to care, it should come as no surprise that the federal national debt is out of control. And while the Bureau of Labor Statistics has reported a consistent trend of employment growth, we still have a long way to go to recoup the economic losses of March and April. Unfortunately, in the long run, federal stimulus efforts that have resulted in spending levels not seen since the end of World War II will inhibit further rapid economic recovery. Many may not realize it, but the debt and the economy are intertwined.

The most recent budget outlook issued by the Congressional Budget Office serves as a gloomy reminder that America faces a less prosperous future if Washington fails to get spending under control and maximize growth. This should come as no surprise to fiscal conservatives who have railed against the rapid growth of federal spending for years. Yet Congress may still soon pass another COVID-19 relief package that could add anywhere from $1.3 trillion to $2.2 trillion to the already exploding national debt.

America’s debt-to-gross domestic product ratio is set to become larger than the economy next year for the first time since the end of World War II in 1945. The United States doesn’t have a revenue problem. It has a spending problem. The past four COVID-19 relief packages alone combined for a $2.4 trillion hit to the deficit. This is what happens when all of the folks in charge spend recklessly in the good times, then open the floodgates during a downturn with stimulus after stimulus. The economy has begun to show signs of recovery from the COVID-19 lockdowns, but the long-term outlook is bleak if we continue spending at the same reckless levels.

As the national debt grows, the Treasury Department issues more securities to finance the debt, forcing interest rates to rise inevitably. Since the spending only ever increases, year after year, more securities are issued to service the debt, taking money out of the economy that would otherwise have gone into private investment. In the long run, if spending is not addressed, the federal government’s ability to service the debt properly will become severely diminished, ultimately resulting in default and a subsequent economic free fall.

As a result, the private sector, a real indicator of economic growth, will see stunted growth as private investment is crowded out by government securities. This will inevitably lead to fewer private sector jobs. Thanks to years of reckless spending and knee-jerk spending as part of COVID-19 relief, the warning signs are now more clear than ever before.

The main silver lining in the CBO report is that debt service costs are projected to be lower over the next 10 years than previously expected. While debt service costs are low, once interest rates begin to rise, the costs associated with debt service will begin to skyrocket. Fiscal conservatives sound like a broken record when they talk about the debt. However, they are the only ones who realize it is critical that we all recognize our fiscal house is about to collapse before our very eyes.

Such a collapse will leave Congress facing tough choices. With the growth of federal entitlement spending, there will be fewer resources available for national defense. Our nation will be left vulnerable in the face of growing Chinese Communist Party influence in East Asia and around the world.

In 2011, the share of the debt held by the public was 65.8% of our economic output. The CBO projects that in 2021, our debt will reach 104.4% of the economy. What kind of world will our children inherit that we are setting our kids up for? Further, why aren’t more candidates talking about this two months before what may be the most consequential election in the past half-century?

The only real solution to this seemingly insurmountable problem is to implement entitlement reforms or other spending reforms. One potential solution would be to implement a “debt brake” akin to Switzerland, a mechanism that places automatic spending caps in relation to the potential GDP. Such a system would force Congress to live within its means.

Regardless of the method, in the long run, something must change. Fiscal conservatives have been warning about the untenability of our fiscal situation for decades. Maybe now that Congress has decided to mortgage the next generation’s future for the sake of perceived economic security today, people will stand up and demand change. This needs to start yesterday on the campaign trail.

Adam Brandon (@adam_brandon) is a contributor to the Washington Examiner's Beltway Confidential blog. He is president and CEO of FreedomWorks.