Government By Credit Card-The Evidence of Excesses
SEPTEMBER 01, 1962 by MAURICE H. STANS
Mr. Stans was Director of the Budget under President Eisenhower and is now President of Western Bancorporation and Vice-Chairman, United California Bank. This article is from his address before the Second General Session of the Chamber of Commerce of the United States, Washington, D. C., May 1, 1962.
I am deeply concerned about our national course of events. As a result of new doctrines that have been allowed to develop over the last 30 years, the proud philosophy and sturdy character of our country are fast deteriorating. We are gradually surrendering our American spirit, based on initiative and self-reliance, for a social and economic mess of pottage. We are fast eroding our historic personal freedoms under the guise of an all-encompassing governmental benevolence. We are destroying the sovereignty of our states and handing over our locally-based institutions to an all-powerful central bureaucracy. And, by our continued experimentation with economic panaceas, we are risking the loss of the sinews that hold our democracy together.
If these apprehensions are right and the natural consequences follow, we may be in the sad posture of watching the slow destruction of democracy and the American way of life by the inept acts of its own beneficiaries….
A Sorry Record
Here is some boiled-down statistical evidence:
1. The entire budget of the
2. The federal government continues to grow, as new agencies, programs, and personnel are added in proliferation. Civilian employees have increased more than fourfold from 592,000 in 1930 to 2,538,000 at the end of the next budget year.
3. The interest-bearing national debt has grown in peace and war from $16 billion in 1930 to $300 billion now, and it is certain to continue upward. Interest on this debt is now nearly $10 billion a year, more than the entire budget in 1940 and equal to 10¢ out of every dollar of taxes collected. This persistent growth in debt is a direct reversal of the philosophy of our government in the first 140 years of its existence, when the goal was to become debt-free.
4. We have mortgaged the future to an incredible degree. If you add to the interest-bearing debt (a) our unfunded liabilities for past services of government employees and war veterans, (b) our legislated contracts and commitments for future spending beyond current costs of defense, welfare, and government, and (c) the actuarial deficiency in our social security system that must be collected through future tax increases already scheduled in the law, the total of our government’s liabilities and commitments is well over $1 trillion. This "government-by-credit card" has imposed a present mortgage on the future of our people equal to $22,000 per family of four.
5. Despite new fancy theories of balancing the budget over the cycles, we have gone in the red 26 times in the last 32 years and have paid our bills without borrowing only six times. The policies of the present administration, unless abruptly changed, are likely to produce four consecutive deficits.
6. A large part of the increase in federal spending and debt is the result of a massive assumption of responsibility by the government for cradle-to-grave welfare, in many cases, without a test of need and at the disdain of the virtues of personal thrift and self-reliance. This has created an accelerating centralization of power in
7. Our gold supply has been heavily depleted in recent years and is still under threat. The cause is our unfavorable balance of payments: our overseas outgo for imports, services, travel, investments, foreign aid, and military purposes regularly run higher than our income from other countries. Our gold is now down from $24 billion to $161/2 billion, of which all but $4 billion is needed to back our currency. Short-term foreign claims that can be asserted against this $4 billion are now $18 billion. And the balance of payments continues to run adverse at between $21/2 and $4 billion a year. As banker to the world, we are not running a good bank.
8. National wage policies have recognized a political balance of power in favor of labor. For some years wage increases have outrun increases in productivity. Industry has been at fault, too; in some cases it has failed to exert the efforts needed to reduce costs and hold down prices. The result of both has been a price structure that has contributed to a cost-push inflation and to our difficulties of meeting competition in world markets.
Our cost of living has advanced significantly, as inflationary policies in both the public and private sectors have exacted their price. It is still moving upward, slowly at the moment, and our dollar of 1940 is now worth 47 cents. It would be a fatal mistake to believe that drastic inflation couldn’t happen here. Our fiscal policies are an open invitation to a crisis for the dollar.