Campaign For Liberty
Monday, August 24, 2009
My sons, who will be five next month, have recently discovered mathematics. They are learning their numbers, and are intrigued by the concepts of addition and subtraction. They do, however, have a tendency to guess that 10 plus 12 is “forty hundred”, or to insist that there is a number called “seventeen eleven”. (This has led me to question my competence as a homeschool dad.)
Even they, though, have a basic understanding of how money works. When we are at the bookstore or the toy store, they know that they cannot buy a six-dollar item if they have just four dollars. They also know that if they save their money wisely, they can afford even better things later on.
It would be nice if the government could learn this lesson, too.
It is overly simplistic to say that spending should never exceed income or saved wealth. We buy houses and pay for college through big loans, since the costs often exceed regular income. We also purchase cars and furniture and other products on pay-over-time, interest-based systems. Similarly, governments must have the capacity to allocate funding for emergencies and major long-term projects.
However, these circumstances should be the exception, not the rule. But sadly, governments overspend as a matter of course. Late Friday afternoon, officials at the White House Office of Management and Budget confirmed that they expect the 10-year budget deficit to reach $9 trillion, not the $7.1 trillion predicted just three months ago. In June, the nonpartisan Congressional Budget Office projected a $9.14 trillion deficit between 2010 and 2019, and that number could now tip into 14-digit range, passing $10 trillion. Deficits could easily exceed four percent of the gross domestic product.
Bear in mind that this is just the deficit projection, not the national debt. That number has passed $11.7 trillion, and is growing at $45,000 per second. That’s more than $5,000 more than the annual U.S. income per capita — every second. Congress has sprung into action several times since the current recession began, boldly raising its meaningless national debt cap. Currently set at $12.1 trillion, the cap will have to be raised soon, as the Treasury Department plans to borrow an additional $892 billion this year.
In the mid-1990s, the rising national debt was seen as so dire that a group called the Committee of 50 States, headed by a former governor of Utah, sought to get at least 38 states — three-fourths of the union — to sign on to an “Ultimate Resolution” that would dissolve the United States and fire the entire federal government for gross incompetence when the debt got too high. The resolution would have kicked in when the national debt hit $6 trillion. Today, a debt of just $6 trillion would seem like a blessing. Today, the White House admits it will overspend by much more than that amount in just the next 10 years.
While spending has sped up under President Obama, it would be wrong to blame just him or his party for this lamentable situation. After a long climb from a $290 billion deficit in 1992, the U.S. federal budget registered a $69 billion surplus in 1998, and by 2000 the surplus was $236 billion. Then came the man The Economist called “Red George”. With “a socialist in the White House”, as the British publication put it, a net loss of $632 billion took place in just four years. By the time of the 2004 election, the U.S. was running a $413 billion deficit, a record at the time. By 2008, the deficit was $438 billion. Then came the bailouts, and the stimulus, and the $1.58 trillion deficit for this year alone.
The government’s “solution”, no doubt, will involve you and me. Imagine for a moment walking into your boss’s office and demanding — not asking for, but demanding — a raise. When told that you have not been doing such a great job lately, you tell your boss, “That’s irrelevant. My bills are going up, and I want to get my house painted, and it would really be nice to take a trip to Cancun next spring.” You would be laughed out of the office, if not fired. But that’s what the folks who work for you in Washington will do. They will demand you pay more, even though they created this mess. When it comes to fiscal recklessness, our leaders have achieved that sought-after bipartisan cooperation we keep hearing about.
This article was posted: Monday, August 24, 2009 at 4:00 am