Hillary Clinton writes in The New York Times that Republican insistence to link any increase in the nation’s debt ceiling to spending control and cuts threatens our national security.
“It’s a sad irony that Mr. McCarthy and many of the same congressional Republicans seemingly intent on sabotaging America’s global leadership by refusing to pay our debts are also positioning themselves as tougher-than-thou China hawks.”
Clinton is right that our enemies, Russia and China, see America today as weak and are using the opportunity to strengthen their influence around the world.
But the reason they see the supposed leader of the free world as weak is not because America refuses to “pay our debts.”
Russia and China see our nation as fiscally and morally corrupt, and they are right.
Whether we’re speaking about a nation, or an individual, absence of self-discipline is a sign of weakness.
The only words that capture fiscal reality in our country today are “profligate” and “undisciplined.”
The Congressional Budget Office projects $2 trillion deficits over the next decade. It projects national debt, today equal to 100 percent of our GDP, to reach a record 118 percent of GDP in 2033 and, by 2053, almost twice the size of GDP.
Average federal spending, per CBO, over the last 30 years, from 1972 to 2022, was 20.9 percent of GDP. In 2023, it is projected to reach 23.7 percent of GDP and by 2033, 25.3 percent.
Yet, this does not seem to bother President Joe Biden and his fellow Democrats at all.
House Speaker Kevin McCarthy and fellow Republicans are putting on the table a plan to at least start getting our fiscal house in order, but Biden has noted he has zero interest in any conversation. He wants unconditional agreement to raise, once again, the nation’s debt ceiling.
Why does it even matter that we should get things under control? Many important reasons.
One, the more that fruits of our hard work are diverted to government rather than productive and creative use in the private marketplace, national productivity suffers. We’re already seeing the results of this.
As economist and blogger Scott Grannis has pointed out, the U.S. economy grew annually 3.1 percent per year from 1950 to 2007. Since then, average growth has been 2.2 percent per year. Economist Steve Moore at the Committee to Unleash Prosperity estimates that this one percentage point drop in annual GDP growth, due to more and bigger government, has lopped off about $15,000 in median family income. If we had continued the 3.1 percent growth, the average American would have some 22 percent higher income, per Moore.
Second, we’ve just gone through a period experiencing the ravages of inflation, the direct result of government spending and pouring increasing amounts of money into the marketplace that are not backed up by productive resources.
Third, higher interest costs. A byproduct of inflationary pressure is increasing interest rates. Higher rates translate into ever-increasing interest costs on our debt burden in the federal budget. The CBO projects that in 10 years, in 2033, interest costs in the federal budget will reach 3.6 percent of GDP. If defense spending remains around where it is today, interest costs in the federal budget will exceed defense spending.
Which takes us back to Clinton’s laughable claim that the Republican push for some fiscal responsibility threatens national security.
Republicans want to reset the federal budget baseline to 2022 and limit increases over the next 10 years to 1 percent per year. Total savings would be $4 trillion over 10 years.
This can be described as a dose of prudence. It certainly can’t be called draconian.
But prudence is the last thing our irresponsible president wants to hear about. He and his party want a blank check on the earning power of the American people.
But, as Margaret Thatcher once said, sooner or later you run out of other people’s money.
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