After the predictable drama of which political party or faction should be blamed for what spending, the debt limit was again raised for the 11th time this century, by $2.1 trillion, or nearly 15%. This increase adds to the nearly $15 trillion the US already owes to international banks, foreign countries, and American investors. This new total debt, potentially $17 trillion, does not count the $62 trillion in obligations for unfunded domestic entitlements, specifically Social Security and Medicare.
The outstanding debt burden of this nation will soon rise to a staggering $77 trillion. Oh, and the Congress agreed to cut a $100 billion per year over the next ten years, starting after the next election, they promise! Whew! Maybe Congress does need a vacation now, after all their hard work!
The latest debt ceiling deal will include new taxation, and it is interesting that the true fiscal hawks in Congress are being excluded from the “SuperCongress” being set up to “solve the problem.” Too bad no one wants to read the Constitution, which clearly limits federal government functions, and presumably its need to tax, borrow and spend.
The Republican Party itself seem happy, and why not? This spending and taxing behavior has marked Republicans for decades, with massive increases in borrowing and spending experienced under Nixon, Reagan, and both of the Bush presidencies. Ronald Reagan, a favorite source of modern conservative quotes and references, oversaw a rise in the annual spending deficit increase from $79 billion to $212 billion in his first term – and the Reagan years added $1.9 trillion to the federal debt. This trend line is symbolic “tea” for the Tea Party, and conservatives, liberals, libertarians, constitutionalists and independents all share a concern about overspending and what it means to our children and grandchildren.
The Democratic Party is just as guilty – they point to Reagan as an awful tax cutter – but in fact Reagan oversaw a drastic 65% increase in the annual tax load. In order to push through a three-year tax cut, he cooperated in the largest tax increase in American history up to that time. It is easy for a politician to just say, “Give me more!” but because our hard-earned and harder-to-keep money is already skimmed by government at or above 35%, most actively avoid paying taxes. Big corporations hire lawyers, accountants and move their headquarters overseas. The rest of us make sure we are at the lowest bracket possible, and we avoid hiring full time employees – all in order to avoid even small increases in taxation. Our own behavior trumps the politicians demand for more, and more.
What about a balanced budget amendment? Mr Goodlatte’s naiveté on this issue is either astounding or he is a really slick politician. Congress doesn’t want balance – it’s way too painful, and they will easily override the low bar set in the language of the proposed toothless amendment. Beyond that, states that strive and compete for ever larger federal handouts would never support a federal balanced budget. They know it would be an end to the gravy train, and would create additional and even unbearable federal tax burdens on their citizens.
Because the Balanced Budget Amendment says nothing about lifting unfunded federal mandates, states themselves could actually go broke if they ratified such an amendment. Incidentally, 32 states are already insolvent, and are currently borrowing money from the Federal Government to pay unemployment insurance. Well, maybe the Congress didn’t know about this little structural problem. In any case, three-quarters of the state legislatures and governors do know, and they will oppose any honest balanced budget amendment. The solvent states are already angry for being asked to help bail out their insolvent neighbors, and they too will rightfully oppose a federal balanced budget that will view well-managed state coffers, like Virginia’s, as cash cows.
So how do I really feel? Like most Americans, I’m angry at Congress for its inability to manage our money. Like most Americans, I hold Congressmen and most politicians in high contempt.
How about this solution: Stop spending money you do not have. Renegotiate any current debt you can, don’t borrow any more, and deal today with needed changes in the entitlement system such that our aged social security and Medicare dependents are seamless cared for, and young people are free of these classic Ponzi schemes, where money from millions of younger workers is immediately disbursed to thousands of past investors. Let interest rates rise to a market-determined level, so Americans and others can actually save and invest in America, and to deter more irresponsible government borrowing.
When a country is on the road to financial collapse, it can get either stay on that road and face ruin, or it can turn onto a new road towards a more positive and accountable future. Congress whined, fussed and argued, and last week, once again, they chose to accelerate towards the cliff. Thelma and Louise couldn’t be prouder.