A Deficit of Priorities
Neither party is talking much about the debt anymore.
In the world of 24/7 news, it always seems that we’re in an election cycle. Yet the themes of these campaigns have dramatically changed since 2010.
Remember the anti-debt rallying cries in 2010 that mobilized a fiscally conservative base? In that mid-term election, the House swung from 178 Republicans in the minority to 242 in the majority, booting Nancy Pelosi from her perch as speaker. The GOP also added five senators, a step toward retaking that chamber in 2014.
Recall the opposition to blowing up the national debt for a few supposed “shovel-ready jobs” that were promised with the “American Recovery and Reinvestment Act of 2009”? Barack Obama and his Democrat majorities in the House and Senate enacted taxpayer-funded spending to the tune of more than $800 billion, ostensibly to cure an unemployment rate that reached a high of 10% in October 2009. Add that “stimulus” package to the historical shrinking size of America’s labor force that has unparalleled distribution of food stamps, unemployment compensation and other “means-tested entitlements.” Pretty soon, to no one’s real surprise, we saw total U.S. debt ballooning by $9 trillion in less than eight years, and nearly $11 trillion since Democrats took Congress after the 2006 elections.
All told, the U.S. Treasury has spent $19.4 trillion — of which Obama’s Democrats are responsible for half — that it doesn’t have. The government continues expanding that debt with no end in sight. According to The Washington Times in a January article, government spending will “spike by 6 percent in fiscal year 2016, to reach $3.9 trillion. That amounts to 21.2 percent of the country’s output as measured by gross domestic product.”
That focus on deficit spending was, obviously, so yesterday. It’s never been a priority for Democrats, but Republicans, who now lead both legislative chambers in Congress, don’t talk about the financial state of our nation as much anymore either.
Why? It seems that good ole’ fashioned polling reflects the demographic and political shift of seniors to the Republican Party. The American Enterprise Institute’s James Pethokoukis notes a Gallup poll chronicling this movement during the Obama presidency: “[S]eniors have become less Democratic, and have shown an outright preference for the Republican Party since 2010.”
Those seniors, as the politically astute know, vote reliably. They also want their Social Security and Medicare benefits unchanged — not that even the most ambitious GOP plan did touch the benefits of current or near-retirees. These two programs comprised 41% of all federal program expenditures in 2015. And despite both receiving dire warnings in the 2016 Trustee’s Report, there is no legislative proposal to deal with the “long-term financing shortfalls under currently scheduled benefits and financing.”
So what is the current approach to government spending in the 2016 election cycle? A recent analysis of both the Hillary Clinton and Donald Trump proposals points to the massive shift in political priorities on both sides of the partisan aisle.
Trump is certainly the personified anger of the voting public that has seen open borders, health insurance costs rise (despite the promises of ObamaCare), stagnant wages due to both cheap labor and cash-hording by corporate entities dealing with regulatory uncertainties and a dramatic increase in both domestic and foreign terrorism within our nation. Yet his details on fiscal policy are vague at best.
Projections made by the Committee for a Responsible Federal Budget (CRFB), a nonpartisan, non-profit organization, using the scarcely available specifics, Trump’s plan would increase the gross national debt by anywhere from $10.7 trillion to $15.45 trillion over the next decade to cover seven proposals he’s outlined thus far. These include reforms in U.S.-China trade relations, Veterans Administration reform, tax reform, health care reform (including a proposal to block-grant Medicaid), and paying for a border wall between the U.S. and Mexico that also includes immigration reform.
The CRFB’s analysis of Clinton’s plans shows that the “gross national debt would rise from $19 trillion to more than $29 trillion” over the next 10 years. Her package of executive plans includes a variety of programs — expanding early childhood education, a “College Compact” that caps tuition and refinancing of student debt at lower interest rates and a proposal to, yes, expand ObamaCare. In contrast to Trump’s proposals, however, Hillary “pays” for her government largesse by taxing more.
Americans for Tax Reform gives us a list of Clinton’s tax increases includes “an income tax increase, a business tax increase, a death tax increase, a capital gains tax increase, a tax on stock trading, an ‘Exit Tax’ that levies taxes on earned income from overseas” and others that are conservatively estimated to tax productive Americans at least $1 trillion.
Interestingly, Trump has said specifically, “We’ve got to get rid of the $19 trillion in debt. … I think we could do it fairly quickly … over a period of eight years.” For that miraculous reversal of America’s addiction to spending to occur, massive cuts in spending and a tremendous jump in individual earnings must happen quickly. Trump isn’t interested in any spending cuts, though.
Meanwhile, despite her “I am woman hear me roar” banner, Hillary addresses the national debt by talking about her “war on women” husband: “When my husband left the White House, we had a balanced budget and a surplus, and if we had stayed on a responsible fiscal path, we could’ve — had we chosen — paid off our entire national debt.” In reality, she “pays” for her proposed spending in the same ways the Obama Democrats do. By getting “the wealthy and the corporations to pay more of their fair share,” which always translates into trickle down taxation and costs to workers and consumers.
In the next three months, specifics of both the nominees of the Democrats and Republicans need to be presented. In the meantime, as you address economic policies being put forward, remember the timeless truth of Frederic Bastiat, a French economist from the classical liberal or today’s modern conservatism, about “lawful” or “legal plunder”:
“But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”