Although economists’ debate how serious this is for the short term, all are in agreement that this level of spending is not sustainable. We will reach a point where continued deficit spending with rising interest payments on debt will begin to drag our economy down.
Ironically, it is the insatiable thirst of the American voter for social programs that created this problem. And it is that thirst that will result in their loss.
Congress spends money in three areas: mandatory spending (primarily Social Security, Medicare, Medicaid, and unemployment), interest on the national debt, and discretionary spending (the annual budget Congress and the president work out for defense, homeland security, health, education, and all the other branches and departments of government.
Mandatory spending consumes the greatest amount of federal revenue (what the government makes from taxes). Federal revenue typically runs around $3.5 trillion a year. Since the advent of Obamacare, mandatory spending now requires about $2.6 trillion, or about 75% of the federal revenue.
Growing interest on the national debt requires Congress to allocate $350 billion, or about 10% of federal revenue. After allocating money for mandatory spending and interest on our debt, Congress is left with only 15%, or $525 billion, of all federal revenue for discretionary spending.
That $525 billion is not sufficient to pay for defense, schools and education, homeland security, and running all of our government agencies. Thus, to keep our country safe and operational we have to run a deficit. A large deficit.
The large number of social programs under mandatory spending is dragging down our country’s financial health. Congress and the president, politicians put into office by the American voters, have elected not to address the problem. The reason is simple. This is a long-term problem, and politicians are in for the short term.
President Barack Obama gave the American people the Affordable Care Act by borrowing on America’s future. In return, he got a nearly $12 million mansion in Martha’s Vineyard. For the short term, it was a win-win for all. In the long term, Obama will still have his mansion.
The American voter, in general, is poorly educated to understand fiscal policy. Americans rank in the lower 15% of the 35 leading economic countries in math. We have little understanding of economics and lack fundamental knowledge of how our government works. Americans are poorly qualified to recognize a leader. They vote for those who say they will give them what they want. It is a pitfall of democracy when dealing with an uneducated public that votes.
So how do we fix our current financial situation? Cut benefits? That would be political suicide. Raise taxes? Based on evidence, Americans are taxed out. Obama’s tax increase to pay for the Affordable Care Act did little to raise revenue.
President Donald Trump’s tax cut actually had the end result of raising revenue. It created a booming economy with the lowest unemployment in history. More people working meant more tax money coming in.
But even that added revenue was not sufficient to pay for all of our social programs.
The answer lies in education. Unfortunately, the two major parties are not interested in an educated public. They have done quite well getting elected by the uneducated. In fact, the Democrats have made it policy to register as many uneducated people as possible to vote. San Francisco even attempted to give those 16 years of age the right to vote.
So, it is left to the Libertarian Party. It is the Libertarians’ task to educate the American voter.
Dave Crockett of Sault Ste. Marie, Michigan, owns engineering firms in Arizona and Michigan; is politically active; and is currently on sabbatical, working at Cirrus Aircraft in Duluth.
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Local View: Long-term spending problem won't be solved by short-term politicians - Duluth News Tribune
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