No Law or Amendment Can Break the Spending Predilection
An old English proverb may help us understand the nature of debt; “A small debt makes a man your debtor, a large debt makes him your enemy.” When the national debt amounted to just a few million dollars, the federal government was a gracious debtor, a protector of all its subjects, enjoying public trust and admiration. Today, with the federal debt approaching $5 trillion, it is a public enemy feared and disdained by millions of suffering taxpayers.
The pyramid of debt is growing at an annual rate of some $300 billion and is expected to accelerate in the future. Both the White House and the U.S. Congress are unwilling and incapable of balancing the federal budget. In a sense of desperation about the growing alienation between the people and their government, many Americans favor a constitutional amendment which would require that “total outlays for any fiscal year do not exceed total receipts for that year.”
No matter what we may think of such an amendment, the deficits, whether they are on or off budget, are too big to be ignored or taken lightly. They are felt not only in every home and business but also in the money and capital markets of the world. After all, the U.S. economy is a substantial part of the world economy, and the U.S. dollar the paramount world currency.
Budget deficits of the present magnitude are a prominent cause of all that ails the American economy: declining private investments, stagnant or even falling standards of living, unemployment of millions of workers, and inability to compete in many world markets. It is a fundamental economic principle that economic productivity, income, and wealth primarily depend on the instruments of production in use, that is, on the amount of capital invested per worker. When government deficits consume the capital coming to market, they impede progress and bring stagnation. The trillion-dollar deficits of the federal government have curbed American productivity, obstructed production, and brought on much economic and social evil.
The federal debt is a pyramid of IOUs for income and wealth consumed in the past. It differs fundamentally from business debt which generally is productive and indicative of rising productivity. Government neither forms nor accumulates capital; it merely consumes the savings of its subjects. Even when it spends the funds on public works, it usually wastes them serving lesser needs than they would have served if left in the hands of taxpayers.
Budget deficits are objectionable also on moral grounds. No generation has any right to impose a debt burden on future generations. And yet, our generation did not hesitate to hang a $20,000 first-mortgage around the neck of every baby born in this country and does not scruple to increase it by more than $1,000 every year. As individual debt is the worst measure of poverty, so is political debt placed on our children the greatest outrage.
Yet, it is imperceptive to fault only politicians and bureaucrats for their spending predilection. In an open society, like ours, they are merely the representatives and agents of the public which is condoning or even demanding the deficit spending. In final analysis, we must fault the ideas and morals that guide the people in their political aspirations.
Most Americans live under the spell of progressive economic thought which confers respectability on political profligacy. On all levels of education the “new economics” teaches that government spending sustains, stimulates, and invigorates economic life. Government spending is presented as a benefit without cost, a grand addition to general welfare, a social achievement of the highest order. In reality, it does not sustain, stimulate, nor invigorate an economy; it diverts economic resources to many nonproductive uses and thereby aggravates the situation.
The popular view of government spending as a grand addition to general welfare springs from man’s inclination to prefer the seen over the unseen. Government largess is visible to all in many forms, as benefit checks and subsidies, public housing and office buildings, many of which look like Greek temples built to the gods. Few observers see the costs borne by millions of people who are forced to tighten their belts and do without. They must forgo better housing, warmer clothing, comfortable transportation, better education, medical insurance, etc., etc. To a thoughtful person, the marble temples of politics, which may last a thousand years, are durable monuments to the supremacy of political power over individual freedom and economic prosperity. They speak of onerous taxation and deficit spending.
Our growing national debt casts a shadow over our future. Profligacy always comes to an end. Unless he changes his ways, the spendthrift falls in disgrace, facing bankruptcy. A national government need not fear bankruptcy in the usual sense, with complete discovery and equitable distribution of its property. No government on earth has the power to hold the U.S. government responsible for its debt, and the U.S. government does not apply and enforce its own laws on itself. But, like bankrupt individuals, it may be hopelessly discredited, as in resources and character. It may pretend to make payment with depreciated dollars or conduct currency and credit reforms which defraud the creditors. It may declare an indefinite moratorium. After all, a vast army of constabulary is ever ready to enforce its laws, no matter how predatory and immoral.
No law or constitutional amendment can break the spending predilection. It will take a radical change of political thought and public morality to reverse the trend. The change will come when, pressed upon by public opinion, the politicians themselves will begin to forgo some of their own largess. It is difficult for legislators who thrive on expensive gratuities, fees, perks, and shady salary increases to cut the entitlements of welfare mothers and children and to reduce federal outlays for the sick and homeless. Any such attempt is bound to run aground the fury of the beneficiaries and the wailing of many politicians who are humorless hypocrites or hypocritical humorists.
Example draws where precept fails. The federal budget could be balanced romptly if the President himself would be made to suffer a salary cut of 50 percent, if the legislators were made to take a cut of 25 percent, and if all entitlements were frozen immediately. Such cuts would signal an honest beginning and allow us to took forward with hope.
