The Greatest National Security Threat No One Is Talking About | Opinion

During the American Revolution our country almost defaulted on its debt, leaving the Continental Army unable to buy what it needed to conduct the war. The only reason that we didn't default is because France saved our bacon, extending a loan in hard currency to back up our own worthless currency. It is not surprising that George Washington and other founders of our nation perceived excessive debt to be a threat to our national security. They believed that the federal government could incur debt during periods of war but should restore fiscal sanity and reduce debt burdens during peacetime.

But in the 21st century, legislation and good sense have clearly failed. Federal elected officials from both major parties have abandoned fiscal responsibility principles and have become addicted to recurring deficits and mounting debt burdens. Through their actions they have put our nation's future economic and national security at risk to the tune of $31 trillion, owed to lenders both domestic—and foreign.

From an economic perspective, some self-professed Keynesians now argue that the idea of debt as a threat to national security is a 'bad idea'. They argue that concern about debt prevents the government from using fiscal stimulus to achieve enhanced economic growth and full employment. For example, they assert that the tepid fiscal response to the financial crisis in 2008 resulted in a slow recovery and less robust economic growth over the past decade. They assert that when interest rates are low the government can incur deficits forever, without increasing the debt to GDP ratio.

National Debt Clock
A Peterson Foundation billboard displaying the national debt is pictured on 18th Street in downtown Washington, DC, on Feb. 08, 2022. Jemal Countess/Getty Images for Peter G. Peterson Foundation

But Keynes never asserted that all deficits are good. He believed they were understandable in times of war, economic contraction, or national emergency, but that government should run surpluses in times of peace and prosperity to keep debt burdens at a reasonable level.

These pseudo-Keynesians advocate for the first part but have forgotten the second part of the Keynes economic theory. They are proponents for the flawed and failed Modern Monetary Theory (MMT).

These MMT proponents have certainly gotten their wish during the Biden administration. Excessive federal spending has contributed to excess inflation, rising interest rates, and economic contraction. Total federal debt to GDP has hit record levels and is headed much higher based on current federal tax and spending policies.

Higher interest rates are causing borrowing costs—and thus the base-line deficit—to increase. Interest costs are now the fastest growing federal expense for which we get nothing! Over the past 50-years interest costs averaged about 2 percent of GDP. The Congressional Budget Office (CBO) now projects that interest costs on government debt as a share of GDP will increase to 3.3 percent over the next decade, and to 7.2 percent by mid-century. CBO also projects that interest costs will exceed spending on national defense within 10 years.

If, in a time of war during the next few years, it becomes necessary to borrow even more to fund our defense, will investors line up to lend us money when we are consumed by paying back what we already owe?

But it isn't necessary to wait to see the problem clearly. In fact, we saw it clearly more than 10 years ago. Mounting debt burdens are having an impact on our national security. Larger deficits have caused investors to demand ever-higher interest rates. When the Federal Reserve starts to divest itself of its trillions in U.S. Treasury securities, the upward pressure on interest rates is likely to increase further. Paying more for interest reduces the ability to fund national security and other important federal initiatives.

The relationship between higher debt to GDP ratios and higher interest rates is non-linear. A shock, such as a war—or even a battle over the debt ceiling—can cause interest rates to rise abruptly, leading to a crisis of confidence and a serious economic contraction. A nation in the midst of a depression makes a tempting target.

Today we face a major peer competitor, China, changing global alliances against U.S. interests, and a range of new national security challenges. At the same time, mounting debt to GDP burdens will serve to reduce economic growth and further reduce our ability to fund national security and other important federal initiatives. Our current fiscal path is irresponsible, unsustainable, and immoral. It's time to change course and restore fiscal sanity.

Since our current legislators are unable to show fiscal restraint, it's clear they must be given clear rules by which to govern. A constitutional amendment that would stabilize public debt at a reasonable and sustainable percentage of GDP will provide that restraint and help restore both fiscal sanity, economic growth, and the nation's security.

We call on the Congress, the states, and the people to support such an amendment.

Bill Owens is a retired admiral and former vice chairman of the Joint Chiefs of Staff. David M. Walker is a former comptroller general of the United States. Along with Barry W. Poulson, they are founders of the Federal Fiscal Sustainability Foundation.

The views expressed in this article are the writers' own.