Bipartisan Debt Is Reckless
As U.S. national debt surpasses $22 trillion, it's time yet again to consider the reasons we're here.
Headlines blared in recent days about the the U.S. surpassing $22 trillion in debt. But it’s even worse when the unfunded and underfunded liabilities are added to that number — on the low end of estimates, those total $122 trillion. Government spending is, without argument, out of control and has reached a true crisis.
The fix should be to dramatically cut and reduce spending.
To reduce spending, one must deliberately prioritize and make adjustments. That process, however, is a joke in the halls of Congress. For the last four decades, Congress has fulfilled its constitutional duty of providing a budget by Oct. 1, the beginning of the fiscal year, only four times — 1977, 1989, 1995, and 1997. Last year, all 12 appropriations bills were passed and included in the 2018 budget by Congress and signed by President Donald Trump on March 23, missing the Oct. 1, 2017 deadline by several months, triggering the use of Continuing Resolutions. For calendar year 2018, the Senate website logs five separate CRs to serve as bridges between spending agreements since a 2019 budget wasn’t timely produced.
When there’s no budget, there won’t be any discipline in spending, much less an opportunity to reduce or cut spending or waste. The use of these Continuing Resolutions is nothing short of extortion tools for “sweeteners” — goodies for the holdouts who have a new way to funnel money into their districts in exchange for their votes. In days gone by, earmarks were the tool to have money flow as payment for votes.
This budget process that’s supposed to occur each year by Oct. 1 really involves only about one-third of all federal spending. The other two-thirds, called mandatory spending, comes in the form of the growing programs of Social Security, Medicare, Medicaid, and other entitlements that are not subject to the appropriations process. This leaves the military, infrastructure, education, and other spending to make up the remaining third. In 2018, the U.S. budget of over $4 trillion was $2.739 trillion of mandatory spending and $1.305 trillion in discretionary spending, with another $363 billion paid on interest for America’s debt.
To give you an idea of the massive growth of Social Security, Medicare, and Medicaid spending, along with every other type of spending, the Peter G. Peterson Foundation reports that the mandatory spending of 1970 comprised 31% of the entire budget with discretionary spending at 62% and interest on our debt rounding out the total of the $195.3 billion. You read that correctly. The federal budget of fiscal year 1970 was less than $200 billion.
What were those numbers in 2018? Flip the mandatory to 62% and the discretionary to 31% with the percentage of the debt hovering about the same, though that total has malignantly grown to $4.4 trillion with record-breaking tax collections, full employment, and yet so much spending.
Blame for the explosion in spending and debt is assigned by some, mostly the Trump-haters, to the $1.5 trillion tax cut over 10 years. Funny, but past excessive spending can’t be blamed on future tax cuts. Moreover, these folks must’ve missed the news that for the first full year of these tax cuts, the U.S. Treasury reported historic collections of over $1.6 trillion in income taxes alone, which exceeded 2017’s collections by — drumroll, please — $9.3 billion. Yes, Dr. Arthur Laffer, President Ronald Reagan’s economist, is grinning as the Laffer Curve is proving true!
Others blame the excessive spending on the military and increased spending on wars, conflicts, and wasted efforts on national security. The data prove this absolutely false. The authorized spending for defense in 2018 was right at $700 billion. Compare that discretionary spending to the massive mandatory spending that’s never addressed in the committee process: $629 billion in Medicaid spending (health insurance for the poor), over $706 billion for Medicare (health insurance for seniors partially funded by individual contributions) and $988 billion on Social Security (originally created for retirement support and funded partially by individual contributions but now expanded for unemployed, disabled, and others and paid for with today’s tax dollars). The government is now a giant social program that provides insurance that happens to have a military and tells states how to run schools.
America’s spending problem is rooted in a fact that we all must embrace and live by: No government has money. All money spent by any government comes from taxpayers, transactions that occur with a fee, levy, or fine paid or some funding arrangement that takes earnings or income from individuals, businesses, organizations, or other governments for the purpose of redistribution.
If America’s debt were divided among each person in America today, we’d each have to pay up over $67,000. As our government spends more each year, our national debt increases, and America has to borrow more from other nations, paying more in treasury securities and interest that consumes more tax dollars of Americans.
Americans are right to demand that Congress do its job to produce a balanced budget each year. But are those same Americans prepared to see the needed reductions in spending where the growth is greatest? Debt is reckless. But it exists because too many Americans have grown to love benefits dished out by politicians.