Both of our major political parties have missed what seems so obvious. One says that we need more tax cuts to strengthen the economy. This is correct. The problem is that they are not willing to also make serious budget cuts. That party has spent more than any previous administration. The other political party wants to expand federal government by spending more of our money by raising taxes. The first plan helps the economy in the short run but not in the long term. The second is an even worse disaster I think.
Look, budget deficits are not a good thing, at least not in my simplistic understanding of economics. What individual would decrease their revenue, at least for the short term, and then also increase spending, for the long term? I know, cutting tax rates generates more money in the long run and thus the government benefits. I agree with that proven principle. Ronald Reagan advanced it and to the astonishment of all his enemies it worked.
What I do not think is a proven fact is that you can keep raising government spending, so as to increase deficits, and not someday have to "pay the piper." The late Milton Friedman, a hero of mine, continually noted that the burden of government is best measured by the level of our spending, not by the level of our tax rates. John Stossel pointed this out very clearly in his syndicated column that appeared in my paper today.
Here is the bad news. Your FICA and Social Security taxes currently exceed the expenditures of these programs. But by 2017 or 2018 this will all change when the baby boomers start to retire in massive numbers and begin to drain the system. Stossel gives President Bush some credit for the falling deficit because of his tax cuts. This plan has shrunk the deficit, at least to some extent. Cutting taxes and cutting deficits are not opposites. Both can and should be done. There is enough blame to go around in Washington. I want to decrease tax rates even further but I also want to seriously decrease federal spending.
John Stossel notes that the anti-Federalist writer Melancton Smith (1787) wrote: "All governments find a use for as much money as they can raise." That is the real issue and few will admit it, whether Republicans or Democrats. One party generally does a better job with this issue than the other but the difference is more one of degree than of deep and true principle, or so it seems to this amateur. I am open to seeing this differently but I think the obvious is pretty obvious. We need to grow the economy, allow people to keep their own money so they can spend it and create new jobs, and limit the role of government in solving every social ill we face. I believe there are some pressing issues that demand federal solutions. I am not a libertarian Luddite. But I also believe that at some point we had better face this deficit issue and slow spending or we will soon face financial and social chaos like we have never imagined.
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Now here’s a topic for an accountant! Much easier than those pesky theological questions.
Here is the Government Accountability’s Office’s confirmation of your conclusion (from http://www.gao.gov):
“GAO’s simulations lead to an overarching conclusion: current fiscal policy is unsustainable over the long term. Absent reform of federal retirement and health programs for the elderly–including Social Security, Medicare, and Medicaid–federal budgetary flexibility will become increasingly constrained. Assuming no changes to projected benefits or revenues, spending on these entitlements will drive increasingly large, persistent, and ultimately unsustainable federal deficits and debt as the baby boom generation retires.”
The facts are not in dispute.
Here is an historical observation that, if true (and I think it is) supports a pessimistic outlook: From Alexis de Tocqueville in the 19th century: “The American Republic will endure, until politicians realize they can bribe the people with their own money.”
One change since that time is that now we are being bribed with our grandchildren’s money. And we’re accepting the bribe.
We the public, including those who profess Christ as savior, demand more and more. And we will demand more until there is no more to get. At least I think that is our tendency since WWII.
A good friend admits to me that he would sacrifice a government benefit IF he could be sure that all would sacrifice equally.
Is a system of equal sacrifice probable? Not likely.
So am I willing to sacrifice even while knowing that others (perhaps even wealthier than I) will not sacrifice? Or will I condition my sacrifice on a perfect system unlikely to ever exist?
Am I willing to house my parents in their old age so that they can receive less social security? Am I willing to help my parents with their medical bills and so reduce Medicare expenses? Am I willing to give more to a church who would help the poor and so reduce Medicaid expenses? All of these would require me to reduce my standard of living.
How unfair.
How Christ-like.
Tough questions and painful solutions await. But perhaps also opportunities for God’s people to be identified and counted as faithful in this post modern age.