The majority of our elected officials who spend our tax dollars are debt addicts. Their reckless policies, if continued, will destroy the nation. Very few of our pols will tell you this, although many of them neither seem to care about it nor understand it. Can you recall any of them calling a press conference to announce overspending must end for the good of the country or it will be enslaved by overspending?
In a decade or two, at the current reckless spending levels by both Democrat and GOP governments, the biggest item in the federal budget will not be paying off the debt or paying for welfare or defense programs but paying the interest on the debt. It’s now either the second or third biggest item in the federal budget. This rarely makes it on to the network news.
But here is what a responsible news media would be asking and telling us about the relentless interest on the red ink—now running at about $1 trillion a year and likely to keep growing as our career pols spend, tax and depreciate the currency with reckless monetary policies that worsen with each budget.
Is interest on the debt now bigger than Medicaid expenditures? Yes.
Is interest on the debt bigger than defense spending? Yes.
Is interest on debt bigger than Social Security spending? Not yet. But in a few years, at the current bi-partisan drunken-sailor spending, it will be.
How did this happen? How did we get so far down the road to an American Weimar Republic with most of our pols saying little about the problem?
“Neither of our political parties seems the slightest bit interested,” writes economist Tom Giovanetti, in a paper “Careening Toward Fiscal Disaster” for the Institute for Policy Innovation (IPI).
Just as the blame for this reckless, fund-everything-and don’t-cut-a-thing policy can be assessed against both major parties, the gap problem goes on and on over decades and administrations. The relentless red ink isn’t because we’re in a recession or depression or even because we’re at war again.
In good times and bad governments, right and left, have added to the debt for decades. So, the business cycle, even when it is going in the right direction, isn’t making times better. For example, last year, in part based on tax cuts, the US economy grew at an annual rate of 2.2 percent. That’s good. Most advanced industrial countries with sluggish growth rates would be delighted to have that number. They hope they can grow their way out of their red ink. It’s usually an unrealized hope.
While the US economy grew last year, the government still ran a deficit of $1.7 trillion, says the Congressional Budget Office (CBO). That number has been challenged. “The $1.7 trillion deficit last year was only the CBO’s projection,” IPI says. “It actually came in at $2 trillion, thanks to several programs—like the Democrats’ Inflation Reduction Act—which is costing a lot more than promised.” The latest fiscal year deficit added to the fictitious national debt of some $37 trillion, which many economists believe is not a real number.
Truth in Accounting—an independent group monitoring public spending and taxing—puts the debt number at $170 trillion. The disparity is because the government engages in dicey accounting standards. The government doesn’t count some debts because they won’t come due for a few years, yet they are real. The government isn’t using strict accrual standards it forces on publicly held corporations. It exempts itself.
Why?
The government is self-reporting and telling us everything is fine. That’s never a good idea for any government, James Madison warned, “A body of men are unfit to both judges and parties at the same time.”
Many economists believe the true debt number is higher. But, for just a moment, let’s tarry a moment in the Never-Never Land of government accounting. The government can’t outlaw the
business cycle, much as many of our career pols, backed by their central bankers using loose monetary policies, think they can. There will be a down period. That’s inevitable.
If the deficit is $1.7 trillion in a period of expansion, what will the deficit be during the next recession or depression, which often follows the end of wars or periods of fiscal or monetary over expansions or another covid emergency, when pols feel justified in going on bi-partisan spending sprees?
Then, even the official government deficit numbers will be a lot more than $1.7 trillion. Recent painful inflation numbers under big spender presidents Biden and Trump will become more painful.
The problem of the growing and perpetual debt isn’t the economy. It usually grows at healthy rates, especially when taxes are cut. The problem of the American Weimar economics, of the amuck public sector, is overspending over generations.
“The government,” notes Judi Willard of Truth in Accounting, “is a rotten money manager.”
