McRae: Debt surpasses defense
By Treasurer David McRae
Let’s go back to your high school American History class. What affected the Revolutionary War’s outcome most? A strong militia? A desire for independence? Taxation? Perhaps not. I’d argue that it was Britain’s national debt. Let me explain.
Prior to the American Revolution, the British monarchy had gone on a spending spree, accruing a national debt of about 75 million pounds. The interest on this debt was significant as well, costing nearly 10 million pounds every year and taking up a substantial part of the national budget. The King’s response was to tax the American colonies, first through the Stamp Act, then the Tea Act. To make a long story short, the colonists revolted, a war broke out, the financial strain on Britain became increasingly burdensome, the British forces and finances were worn down, and America claimed its victory – and its independence.
Today, it’s the United States who is facing a national debt crisis. In 2024, American taxpayers spent $882 billion on national debt interest payments, marking the first time our interest payments exceeded defense spending (which was around $874 billion). And there are no signs the debt issue is subsiding.
Since 2020, America’s interest costs have nearly tripled, becoming the second largest federal expenditure (behind only Social Security). The Bipartisan Policy Center explains the threat this poses (and frankly, it doesn’t sound much different than Britain’s Revolutionary-era dilemma): “Congress may become less inclined or able to fully support the country’s national security strategy or meet security requirements for our allies as the debt challenges our priorities.”
The national debt is a national security threat. It’s forcing America to pinch pennies on one of the federal government’s only constitutionally mandated responsibilities: Providing for the common defense.
During the Korean War era, defense spending equated to 13.58 percent of overall GDP. By 2024, spending had decreased to 3.4 percent. Of course, I’m not advocating for a blank check to the military industrial complex, as Reagan nicknamed it. But I do believe our military and our troops deserve the funds needed to succeed.
Unfortunately, recent cuts have had adverse effects. Housing construction for our troops has been constrained, enlistee bonuses limited, training exercises canceled, combat squadrons closed. With massive threats from China, the Middle East, and elsewhere, now is not the time to weaken our defenses.
Hope, however, is not lost. There is a solution – a solution that can be modeled after Mississippi’s own way of doing things. Here, we balance our budget every year. We pay our bills on time, and we invest wisely. We protect our credit rating and take steps to lessen the government’s burden on taxpayers. To get the country’s fiscal house in order, the federal government must do the same. It’s time to balance the budget, pay down our debt, and restore America’s military and economic strength.
Mississippi Treasurer David McRae is the 55th Treasurer for the State of Mississippi. In this role, he helps manage the state’s cash flow, oversees College and Career Savings Mississippi, and has returned more than $100 million in unclaimed money to Mississippians. For more information, visit Treasury.MS.gov. Opinions expressed are solely those of the author.
