For the first time since World War II, the portion of our national debt that we owe to others, so-called “public debt,” has exceeded 100 percent of the national economy (Gross Domestic Product). And the latest projections from the Congressional Budget Office indicate that U.S. debt to GDP will grow to between 115 percent and 120 percent by 2030. In 2009, Greece experienced a debt crisis when its debt reached 115 percent higher than its GDP. The public debt-to-GDP ratio is important because we are obligated to pay off interest on our debt out of GDP. If we cannot pay, the country goes into default.
In part, our ratio is rising because we’ve been fighting. Under President Bush we were fighting the terrorists; under Obama, the recession; and under Trump, the coronavirus. No matter what the cause, Mercatus Center economist Veronique de Rugy observes, excessive spending – which is the primary cause of high debt-to-GDP ratios – leads to “much higher taxes, lower future incomes, and intergenerational inequity.”
Massive spending cuts and increased taxes caused unemployment to soar and incomes to decrease in Greece, which ultimately led to poorer health outcomes. The types of health outcomes affected by income shocks like Greece’s are precisely the same ones that have been happening here due to COVID-19 lockdowns. In other words, default health problems could be compounded by our existing situation.
In Greece, suicide, homicide and infectious disease mortality rates increased by 16.2 percent, 25.5 percent and 13.2 percent, respectively between 2007 and 2009. In at least one Greek city, there was a rise in childhood obesity because families could afford only junk food. People let diseases like diabetes go untreated until the situation got so bad that they couldn’t live with it anymore. Cardiovascular disease, chronic kidney disease and cirrhosis also increased. Finally, an article in Lancet Public Health observes that “increasing rates of major depression … have been documented, along with stagnation in maternal, infant, and child mortality.”
We are already experiencing the same health problems due to the unintended consequences of coronavirus lockdowns. In particular, we are seeing massive failures to diagnose or treat serious chronic illnesses such as diabetes and heart disease; increases in alcohol and drug dependency, suicides and spousal abuse; failure to get childhood vaccinations (unrelated to the coronavirus); and huge increases in mental illness.
Another compounding factor has been the explosion of obesity in recent years. In 2001, 20.4 percent of the population was obese. Today, the rate has doubled to 42.4 percent. Accompanying obesity, 45 percent of the population now has either diabetes or prediabetes. Diabetes has increased from 4.75 percent in 2001 to nearly 11 percent today, and it’s still increasing. The reduced income resulting from a debt default will, just as has happened in Greece, lead to worse diets and health effects.
While being the world’s favorite debtor because of our historically strong economy, we have been able to pay interest on our debts, in part because people lend to us at low interest rates. But if they begin to perceive that we may be unable to pay our bills, we could end up like Greece.
It’s unclear just how much spending the new administration is planning, but one estimate projects $11 trillion over the next decade. Just as with previous administrations, we will have crises, including more spending on the coronavirus. But, at some point, without massive unpopular tax increases, which would also slow the economy down, we could find ourselves in a fiscal crisis of unmanageable proportions. It’s worth noting that while Greece suffered due to its fiscal collapse, it was a member of the European Union and was grudgingly bailed out. It’s doubtful that any country will bail out the United States.
There are two ways to respond to a potential health crisis: treatment or prevention. Better and more widely available treatment is helpful, but people will still suffer; although perhaps not quite as much. But if we allow the country to default on our debt, we will have far fewer resources to spend on health care.
The second way to respond is through prevention. Rather than continue to increase spending on every issue and program, we could begin to take a hard look at our expenditures relative to what we can realistically afford. Controlling spending, besides being a fiscal issue, is also a health promotion/disease prevention program.
It’s not just the United States and Greece; the same problem has affected Spain, Argentina, Ecuador and Lebanon. As always, the poor, retired pensioners and the young are likely to be the ones who suffer the most. Everyone always says, this time (fighting this crisis du jour) is different, so we’ve got to spend more. No, we don’t — and our health depends on it.
Richard Williams is a senior affiliated scholar with the Mercatus Center at George Mason University and former director for social sciences at the FDA’s Center for Food Safety and Applied Nutrition.