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M.N. Youshei
Oct 31, 2018 5:01PM ET
This is a serious problem...
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Bolton Calls National Debt ‘Economic Threat’ to U.S.
Published Oct 31, 2018 02:17PM ET
Updated Oct 31, 2018 02:30PM ET
© Bloomberg. John Bolton
(Bloomberg) -- U.S. National Security Adviser John Bolton called the national debt a “threat to the society” that requires significant cuts to the government’s discretionary spending.
Bolton, speaking Wednesday at an event hosted by the Alexander Hamilton Society in Washington, said he expects U.S. defense spending “to flatten out” in the near term. He said he didn’t anticipate major cuts to entitlements such as Medicare and Social Security.
“It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society,” Bolton said. “And that kind of threat ultimately has a national security consequence for it.”
Discretionary spending is set by Congress each year, while spending on entitlements is twice as large and more automatic, generally dictated by demand for the services. Many budget experts say entitlement spending presents a larger long-term threat to the U.S. economy because of both its magnitude and increasing demand from an aging population.
“In the near term, the budget deficit problem is in the discretionary spending,” Bolton said. “The entitlements come in a few years and that problem’s going to have to be addressed. But right now, you can have significant impact on both the deficit and the national debt by cutting government spending on the discretionary programs.”
In President Donald Trump’s first full fiscal year, the U.S. budget deficit grew to $779 billion, the highest level since 2012, despite an economy that Trump budget director Mick Mulvaney last week called a “Goldilocks moment” combining low unemployment and contained price growth. The deficit growth has been fueled in part by tax cuts and higher government spending since Trump took office, according to the Congressional Budget Office.
The non-partisan Congressional Budget Office forecasts the budget gap will reach $973 billion in fiscal 2019 and exceed $1 trillion the next year. Goldman Sachs Group Inc (NYSE:GS). predicts the deficit will reach $1 trillion and $1.125 trillion respectively.
(Updates with additional remarks in fifth paragraph. The headline was corrected in a previous version of this story.)
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