Once upon a time, in a not so distant past, American politicians across the spectrum maintained the importance of fiscal responsibility and restraint. Now, it seems that we only hear of a balanced budget or about our ever-increasing deficit about once or twice a year (usually around springtime when the President’s budget is being proposed, and there are one or two budget hawks who threaten to shut down the government because of reckless spending). It seems that most of our 535 members of congress feel that our $21 trillion (and growing) national debt isn’t really worth talking about. It is.
Let’s begin with our current financial situation. A nation’s fiscal solubility is most accurately measured by a metric called “Fiscal Space.” In essence this tallies a country’s debt to Gross Domestic Product or in other words, how much we spend versus how much we produce. As you can see, as of early 2018 we are still in the “green” or “safe” area, but we are squarely in the bottom quadrant and trending downward.
Most American families manage their finances with the not-so-radical philosophy of living within their means. When special circumstances arise and it is necessary for a family to take out a loan for an investment (i.e., a modest house, a basic car, or education) it is not without a great attention to detail and intention to pay off that debt as soon as possible, so as not to incur even more financial loss. However, these common sense principles are nowhere to be found in the federal government, in fact, it’s quite the opposite.
The longer we kick the can down the road and choose not to pay off our debts, the more interest we have to pay on it. With the sheer volume of debt we have incurred it is no surprise that the Congressional Budget Office projects that by the year 2020 we will be using more taxpayer money to pay the interest for our debt than funding our Military, Social Security, or Medicare. That is astronomical. This year, Congress voted to authorize a budget that spends $4 trillion more than we will collect in revenue. Make no mistake, this type of short sighted financial planning will bring negative consequences on generations to come.
We may still wonder what the consequences of the debt are and who it would affect. The answer to that question is grim. Defaulting on our debt would inevitably lead to high inflation due to mass selling of the dollar. Prices of everyday goods would steadily rise while the value of the dollar would fall. Social Security payments would freeze along with other important government programs. In essence, the consequences of the debt strike the most vulnerable citizens in our nation, the ones who need our help the most.
The national debt is a looming crisis, but it is not unavoidable. There are concrete steps that we as a nation can implement now to steer our fiscal ship off of this crash course.
- We need to balance the budget. Instead of slapping together profligate budgets without a second thought, our lawmakers need to follow the example of the American people and spend within our nation’s means. This type of common sense fiscal responsibility will stop the increase of our debt, and it’s the natural place to begin.
- We need to reign in the rhetoric that hinders responsible spending. In a recent press conference Office of Management & Budget director Mick Mulvaney explained what he called “D.C. Math.” This is where pundits and reporters call anything less than everything an agency asks for a “cut”—even if the overall budget is equal to (and in some cases more than) their previous budget. For example, let’s say the Department of Labos asked for a 10% budget increase for the next fiscal year. The administration reviews their proposal but decides to only increase their budget by 5%, many news outlets would report this as a cut, even though their funding is increasing. This obfuscates the work being done to keep spending in check.
- Follow the 10th amendment and transition many federal programs back to the states. Healthcare, and education are just a few issues more effectively dealt with and served through more localized governments.
- Most importantly we need to reform our entitlements to ensure Social Security and Medicare are secure for generations to come. We need to enact a plan to raise the full Social Security collection age incrementally to 69 over the next 45 years. As people are living and working longer, we need to adapt our social framework accordingly.
There’s an old Greek proverb that says “A great society is built when old men plant trees they know they will never sit in the shade of.” Let us follow the wisdom of that proverb and stop kicking the can down the road and deal with our national debt head on. It won’t be an easy fix, but I firmly believe that the strength and resolve of the American people can overcome any obstacle.
It’s time to get to work.
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