Trillions and Trillions
Surprising no one, politicians show no restraint when planning how to spend other peoples money
When I was a lot younger, my dad, usually after I asked him to buy me something particularly expensive, would often inform me that “you wouldn’t want to spend that much if it was coming out of your own wallet.” Unquestionably, he was right. But I was just an unemployed freeloader at the time (otherwise known as a ten-year-old), so I didn’t think too hard about it.
Now I’m older. I have a job, pay taxes, and starting to see how expensive life really is, and my father’s oft-repeated phrase comes to mind quite often. Especially when looking at the Democrats’ proposed spending plan.
Recently, Democrats unveiled their 3.5 trillion budget reconciliation plan that is expected to include an assortment of Democratic wishlist items such as funding for universal preschool and community college, child care subsidies, 12 weeks of paid parental leave subsidized by the government, and billions in tax credits. Furthermore, this is on top of the 600 billion dollars of proposed spending from the bipartisan infrastructure bill and the 1.9 trillion dollars passed in March to combat the coronavirus. Add all of these things up, and Democrats have laid the foundation for the government to spend more than a whopping 5 trillion dollars in only single year.
Spending money that we don’t have
As of now, America possesses 28 trillion dollars of debt, which is about $85,000 per citizen. Moreover, the national debt has now surpassed the size of the entire US economy. The fiscally responsible thing to do now would be to seize new government spending and focus on keeping the economy healthy so that the debt can be paid off. Unfortunately, the fiscally responsible option is rarely ever on the negotiating table in Washington.
The effects of the debt are already starting to be felt by consumers through significant inflationary price increases. Prices rose by 5.4% in June compared to that time last year and are expected to continue growing for the next couple of years. This presents a real threat to all Americans since inflation causes the purchasing power of each dollar to decrease. For example, after WW1, Germany experienced such high amounts of inflation that by 1923 one American dollar was equal to 4,200,000,000,000 marks.
Supporters of this massive spending boondoggle boast that the measures are relatively popular among the public. However, this is only because people generally like getting free stuff. But as Milton Friedman once said, “there ain’t no such thing as a free lunch.” Ultimately, the spending will be paid for by massive tax increases, which will hurt every single American citizen and stifle economic growth. Despite the early warning signs, Democrats seem determined to continue pushing for their budgetary insanity regardless of what the adverse consequences might be.
What’s next?
It’s true that after four years of massive spending under the Trump administration, Republicans aren’t in a great position to be criticizing big expenditures. During the 2016 presidential campaign, Trump refused to address the national debt. When he became president, he neglected to even touch runaway entitlement spending despite legislative majorities in Congress. At the end of Trump’s presidency, the national debt was up by eight trillion dollars.
Regardless, Republicans should take this opportunity to return to being serious about reducing the national debt. And that doesn't mean just cutting taxes, which has been the Republican game plan for decades. While that strategy does improve economic growth, it doesn't completely deal with lowering debt. The fact is, slashing taxes while neglecting to lower government spending will just result in debt, debt, and more debt. If conservatives are serious about fiscal restraint, they must vote "no" on both infrastructure bills, the bipartisan deal and the reconciliation bill.
A quick note. Earlier I wrote a piece on the importance of bipartisan agreements (read it here). I still stand by that; however, just because a bill is bipartisan doesn't mean it should still be voted for regardless of the content. If there was a bipartisan bill to outlaw dog-walking, I should hope that all reasonable people would vote against it. Bipartisan agreements must, above all else, be good legislation done in good faith. That simply isn't what is happening now.
For too long, both political parties have neglected to be serious about the problem of our national debt. Sooner or later, we will have to come to terms with the fiscal reality and start making hard choices. Because, just as Mordo said in Doctor Strange, "the bill comes due."
What I’m Watching…
The Bucks won the NBA finals against the Suns 4-2. Giannis Antetokounmpo had a staggering 50 point game with 14 rebounds and 5 blocks. Chris Paul also played well with 26 points, but the Suns simply didn't have a good strategy for dealing with Giannis.