Today I read an article where 27 Blue Dog Democrats indicated they would support a Balanced Budget Amendment. Nothing could be more music to my ears. The deficit is the single most important issue facing this nation and nobody seems willing to pay attention to it spiraling out of control.
We are now $22 trillion dollars in debts. Republicans, over the years, have professed their concern over deficit spending but when in power they have done nothing to reign in runaway spending. In fact, they have contributed to the deficit all in the name of sending funds to programs they support and to projects back home in their states and districts. The conservative voters in their districts applaud them for taking care of the “home folks” all the while ranting about spending in someone else’s district. Those funds spent somewhere else are considered pork while their member brings home the bacon.
A simple look at some facts will tell you that both Republicans and Democrats have given lip service to the deficit but allowed it to grow unabated.
|Year||Deficit in Billions|
As you can see by the table, we started to reduce deficits in the mid-2000s, but the nation went into a recession and the solution by the newly elected President, Barrack Obama, was to ramp up government spending to stimulate the economy. In 2008 the deficit was almost triple the amount from the previous year and in 2009 it increased another 300%. By 2013 the deficit began to come down in the final years of the Obama administration only to see it begin to rise again under President Trump.
To give you another perspective you should look at the total debt by nations around the world. According to the CIA World Factbook, the most indebted nations in the world are the United States, the United Kingdom, France, and Germany. The United States has a total of $29.27 trillion of external debt which accounts or 45% of the total debt owed. This includes that money owed to other nations and the money owed to bondholders in the United States. The United Kingdom is second with $8.13 trillion in debt which is 27% of the total. France has $5.36 trillion and Germany is right there with another $5.35 trillion.
We seem to have an insatiable appetite for benefits to be handed out by the government and we have no regard for what it costs. If we divided the national debt up and assessed every citizen their share the amount would exceed $410,000 per person. That is every man, woman, and child in this country. A family of four now owes over $1.5 million dollars.
What I have outlined here is just the federal debt. We have states borrowing money through bonds that are moving higher and higher. In 2018 25 states were expected to have revenue shortfalls and solutions are to pass bonds to pay for the projects they don’t have the funds for right now. We see this in local elections where bond referendums are on the ballots and instead of asking the hard questions the majority of voters just vote yes because the projects all seem like good things.
What are the real solutions? Trump apparently seems content to continue deficit spending. I don’t see any Democrat running for President expressing concern about the deficit and in fact, they are all calling for increased government spending through a variety of expansive government programs.
I hear many on the left, particularly those running for office, suggest that we need to raise taxes. They have proposed a lot of different mechanisms to raise taxes. Some want to increase marginal rates to as high as 70-90%. They cite history as their basis when marginal rates were much higher than they are today. But they do not account for the deductions that were available to taxpayers in those days. In truth, the effective rates, the actual percentage of your income that you pay in federal income taxes, has not changed that much. As we took away deductions, we lowered marginal rates. Others such as Elizabeth Warren have said that we should tax wealth. Basically, she is saying that if you have accumulated a certain amount of wealth you should pay a surtax on that wealth.
But nowhere do they say they would use these funds to reduce the deficit. All of them have some grandiose plan for expansion of government that would not only suck up those new taxes, but it would expand the deficit to even higher record numbers. We hear calls for Medicare for all that would cost trillions of dollars. We hear calls for free education for all that would cost trillions of dollars. And now we see a bandwagon effect of liberal candidates supporting reparations to blacks for slavery.
The truth is we cannot tax our way out of deficit spending. You reach a point where you cannot tax people anymore without hurting the economy and having them rebel. The only way to address the deficit is to cut spending. That means across the board cuts to just about everything we spend money on. Republicans will object to cuts in defense and their other pet projects. Democrats will object to any cuts in domestic spending and their pet projects. But if we keep heading down this road of exploding deficits we will destroy this nation. At some point in time, the money required to pay the interest on the deficits will become so large that we can no longer afford it and we will become like Venezuela. Inflation will become rampant. The interest on the debt will have the same impact on our economy that the onerous reparations assessed to Germany after World War I and was one if the direct effects that led to World War II.
According to the Peterson Foundation, there are some interesting facts about where the interest is already headed.
In the fiscal year 2019, interest will be greater than the amount spent on income security — a category that includes programs such as the Supplemental Nutrition Assistance Program, Supplemental Security Income, and unemployment compensation.
In the fiscal year 2020, interest payments will exceed the amount that the federal government spends on children, according to projections from the Urban Institute.
In the fiscal year 2021, interest will surpass the combined amount spent on Medicaid, the Children’s Health Insurance Program, and subsidies for the purchase of health insurance under the Affordable Care Act.
In the fiscal year 2022, interest spending will exceed all mandatory spending other than that for Social Security and the major health care programs. That budget category, known as “other mandatory” spending, includes programs for income security, military retirement, and agriculture.
In the fiscal year 2023, the federal government will spend more on interest than defense.
Politicians need to wake up. On both sides of the aisle, they need get their heads out of the sand and start taking action to reduce government spending and get up to not only a balanced budget but to a surplus to start reducing the deficit. I would agree to tax increases but they would have to be accompanied by $2 in spending cuts for every $1 in tax increases. Every bill introduced by some member calling for some government program would have to show how the bill would be paid for and how much it would cost each person. We have to end this feel-good approach to governing that so many politicians have adopted. No more “buying” votes by promising benefits. That is exactly what this reparations talk is about.
If these Blue Dogs in Congress are serious about getting spending under control I salute them. I urge Republicans to join with them and perhaps we can find a majority in Congress to start acting fiscally responsible. Perhaps Congress will actually begin representing not just the people today but our children and grandchildren and saddle them with debt for our greed.
In conclusion, I leave you with a chilling quote from a Scottish philosopher from a long time ago. There has been some debate over the true origin of this quote but it still rings true. It was true then and it is true today.
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to apathy; From apathy to dependence; From dependence back into bondage.”
Alexander Fraser Tytler (1747-1813)