– June 13, 2019
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Congress has once again demonstrated its commitment to fiscal profligacy. The U.S. national debt hit $22 trillion earlier this year, which is roughly 110 percent of GDP (gross domestic product, all newly produced goods in services in a year). Meanwhile, the Congressional Budget Office expects the annual deficit to be $1 trillion by 2022. This is despite an 80% increase in tariff/tax receipts in May 2019 from a year earlier.

Sen. Rand Paul’s (R-KY) “pennies plan” failed a procedural vote the evening of June 3. The bill would have cut 2 percent from all federal line items for the next five years, reducing federal spending by $11 trillion over the next decade. Instead, the government will continue to spend hundreds of billions more than it takes in each year. The quest for balanced budgets looks just as quixotic as ever.

All Democrats voted against the plan. Surprisingly — at least for those who focus on Republican rhetoric instead of Republican policy — it was also opposed by a majority of Sen. Paul’s party. These are the same people who campaign on spending restraint and balanced budgets. But when called upon to make hard choices, most Republicans show themselves to be irresponsible stewards of the public purse.

Runaway spending has long been a problem at the federal level. More and more, however, it looks like we are running out of time to rein it in. The Government Accountability Office, a nonpartisan agency that advises Congress, warned in April of “serious economic, security, and social challenges” if deficit spending is not brought under control.

Even more concerning is the value of unfunded liabilities for Social Security, Medicare, and Medicaid. A low estimate for these is $50 trillion; some economists put it as high as $200 trillion. For comparison, that’s roughly the entire world’s GDP three times over.

Many members of the House and Senate will wring their hands over fiscal matters at campaign rallies or in front of television cameras. But then they quietly and continually vote for higher spending. These individuals deserve to be called out for their duplicity and their failure to discharge the duties of their office in good faith.

But there is a harder truth we must face: this is not entirely the fault of our elected officials. It is our fault as well — we, the people.

The reason there are so few deficit hawks in Congress is that fiscal responsibility is bad electoral politics. Almost everybody likes receiving services from the government. Almost nobody likes paying for them. So if a politician offers constituents a range of public services but pays for them with debt instead of taxes, that politician will beat at the polls a rival who insists that we pay as we go. It is not just our elected officials who are addicted to deficit spending. We are, too.

Members of Congress will embrace fiscal responsibility as soon as a majority of citizens make the effort to hold them accountable — but not before. It is all well and good to criticize profligate politicians. But if we keep avoiding the duty to review public finances, we risk becoming as worthy of condemnation as they. Self-governance requires that we do the work necessary to shore up the public sector and establish an effective and sustainable government, not an impotent and bankrupt one.

Reining in out-of-control spending will be difficult. It will require trimming so many programs that every citizen will feel disgruntled about something. But unless we make this short-run sacrifice, there will not be much of a long run worth having. As the ancient Greek proverb goes, “A society grows great when old men plant trees in whose shade they know they shall never sit.” We must adopt this spirit if we want to preserve the American dream for our children, and their children after them.

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Alexander W. Salter

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Alexander W. Salter is an Assistant Professor of Economics in the Rawls College of Business and the Comparative Economics Research Fellow with the Free Market Institute at Texas Tech University. His research interests include the political economy of central banking, NGDP targeting, and free (laissez-faire) banking. He has published articles in leading scholarly journals, including the Journal of Money, Credit and Banking, Journal of Economic Dynamics and Control, Journal of Financial Services Research, and Quarterly Review of Economics and Finance. His popular work have appeared in RealClearPolitics and U.S. News and World Report.

Salter earned his M.A. and Ph.D. in Economics at George Mason University and his B.A. in Economics at Occidental College. He was an AIER Summer Fellowship Program participant in 2011.

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