Libertarian writer Bill Winter has compiled some figures that should make all of us sit up an take notice. For instance, at 12 noon on August 1, 2003, the official U.S. national debt was exactly $6,736,489,356,420.66... $6.7 trillion in round figures. Thirty seconds later the figure would have been $590,000 higher. The debt grows by $70 million per hour, $1.68 billion a day. In one year, $613 billion in additional debt is accumulated by the government. In 2003 the federal government will take in $1.75 trillion. It will spend $2.21 trillion.
Thomas Jefferson stated more than 200 years ago that public debt is the greatest of dangers to be feared. Good thing he's not around today. Our famous founding father would probably experience a total mental meltdown.
Debt is what makes the modern world go around government. Old Thomas didn't believe in making future generations pay for operating government today. He had the quaint idea that except for emergencies government should live within its means so as not to overburden taxpayers in the unforeseeable future. "We should consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves," he wrote in 1791.
When the government runs a deficit, it is essentially taking money from one generation and giving it to another, said Creighton University economics professor Ernie Goss. That way, another administration and congress in some distant tomorrow can deal with it.
This year, Winter noted, Americans finally paid off the Vietnam War, which ended in 1973. The $400 billion prescription drug benefit the administration has promised seniors will be paid for with deficit spending, which means our children, grandchildren and great-grandchildren will be picking up the tab.
In 2003, the Bush administration achieved American history's largest deficit, bringing deficit spending back into the headlines. But the headlines said the current year's deficit was $455 billion, yet the debt clock says the debt increased by $613 billion. Which is the true figure?
Winter says the $455 billion figure is phony. The federal government's unique accounting practices count Social Security Trust Fund surpluses as an asset, which on paper reduces the size of the deficit. For example, this year Social Security will take in $160 billion more than it will pay out.
But instead of going into the fantasy trust fund which contains nothing but Treasury bond IOUs which the government owes itself, the annual surplus is immediately spent on general government.
Government accounting allows it to get away with blatant deception, Winter says. In both 1998 and 1999, politicians claimed there was a budget "surplus." Yet the federal debt increased $120 billion in 1998 and $162 billion in 1999.
Many Americans don't understand the difference between the federal deficit and the national debt. The federal deficit is the amount of overspending politicians do in one year. The national debt is the sum of all the yearly deficits (minus what has been paid off).
Federal spending deficits combined with the increasingly gigantic U.S. trade deficit (which is money America owes to foreigners) is creating a noose around the neck of America, says Kenneth Rogoff, chief economist for the International Monetary Fund (IMF). The world gives a poor developing country just enough rope to hang themselves, he said. "A country like the United States, they give them enough to tie the noose around their neck several times. But it does happen in the end."
The first nine months of fiscal 2003, the Treasury spent $278 billion for INTEREST on the debt. Interest on federal debt is the government's third largest expenditure, after Social Security and military spending. 20 percent of every tax dollar goes to pay interest on money borrowed by politicians decades ago. This crowds out private borrowing and takes away the economy's means of achieving economic growth.
When the government spends more than it takes in from taxes, says Benjamin M. Friedman, professor of economics at Harvard University, the Treasury has to borrow in the financial markets to cover the overage. "This absorbs some of the saving done by families and firms."
Richard Ebeling of Freedom Foundation says that this year, the Bush administration's deficit will cost more than the combioned total of all the furniture and household items bought by Americans this year ($319.2 billion), or clothing and shoes ($321 billion), or single family residential housing ($245.3 billion). Shattering the myth of Republican fiscal conservatism, the Bush administration and Congress in three years have increased NON-DEFENSE DISCRETIONARY SPENDING by 20.8 percent, Winter says.
That's more than the full four-year term of Jimmy Carter (13.8 percent) and the second term of Bill Clinton (8.2 percent). Over the last three years, federal spending under the Bush administration increased 2.5 times faster than national income.
Winter writes: "The cure, for deficit spending is not much different than the cure for obesity, which is: Eat less and exercise more. In fiscal policy, that means spend less and exercise more self-restraint."
Following are some suggestions from the Libertarian Cato Institute to begin the restoration of fiscal health to the federal government:
(1) Cut government spending.
(2) Don't raise taxes. Raising taxes to balance a budget is like drinking a six-pack of beer to cure a hangover.
(3) Pass a strict balanced-budget Constitutional amendment that neither Congress or the president can override it, that all off-budget items are included in the budget and that the budget is balanced exclusively by cutting expenditures, not by raising taxes. Combined taxes at the state, local and federal level have exceeded the safety line for a healthy economy.
Quote:
"If a nation or an individual values anything more than freedom, it will lose its freedom; and the irony is that if it is comfort or money it values more, it will lose that too." W. Somerset Maugham