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Writer's pictureMicah French

These are the last days of the Great American Empire, By Debbie Downer

Updated: Apr 2, 2021

Note: This piece was written in Oct 2020 after the first Covid relief package was passed during the Trump administration. With each subsequent Trillion dollar proposal the concepts within the article become more and more pertinent.


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I'm of the opinion that the US Federal Surplus/Deficit is the #1 indicator of the long-term financial health of our country.


Below is the Annual US Federal Budget Surplus/Deficit by year:


I built this chart myself using Annual Budget Surplus/Deficit Data from the Congressional Budget Office. The 2020 figure is a projection (since the year isn’t over) and looks the way it does due to the already $3T+ expenditure on COVID Relief Packages.

For those that don’t know the CBO is a government entity created in 1974 designed to provide a non-partisan accounting of revenues and expenditures by the federal government. The Speaker of the House and the “President Pro Tempore” of the Senate jointly appoint the CBO Director for 4-year terms, and the list of CBO directors is a list of people you’ve never heard of because to this point they’ve remained relatively non-partisan.

What this chart says to me is; “We played a good game guys, high five, but we’re obviously done here.” The 2020 Budget Deficit dwarfs everything in American History. It makes the 2008-2009 Budget Deficits during the Great Recession look like pocket change.

If the American public at large truly understood the danger here, and both they and politicians had the resolve to do something about it, I’d say we’d have a chance. We are very much not in that position due to our 2-party system.

Let me explain why each party is incapable of addressing this issue.


HERE'S WHERE THE REPUBLICANS FAIL ON THIS

Republicans want to cut taxes. The only way you can both cut taxes and bring down the deficit is if you also cut programs. In the past Republicans have refused to do this at a level that is meaningful, claiming that the resulting boom in the economy after a tax cut will cover the gap from the tax revenue loss. Time and again this has proven to be mathematically false, regardless of how you feel about it.

To illustrate this, instead of looking at the simple +/- for the Federal Surplus/Deficit above, lets instead look at the Deficit as a % of the US Gross Domestic Product (how much we produce as a country in a given year). Note I’ve cut 2020 out so that it doesn’t skew the data so badly it’s hard to read:


Ta da, sure enough even accounting for how “booming” the economy was in a given year the deficit as a % of GDP chart looks the same as the original budget deficit chart.

Unless it generates a radically different economy, like the industrial revolution or the advent of the internet level radical, the economy doesn’t move enough via tax cuts to offset the revenue losses. You have to cut programs to cut the deficit if you’re also looking to lower taxes.

So Republicans, where do you want to cut spending?



Here is the Total US Federal Spending chart for 2019.

The green are things we consider “mandatory” spending as a country, either interest payments on outstanding debts or things that the American people have paid into explicitly and therefore are owed benefits from by the government.

You pay into these programs when taxes are taken from your paycheck, therefore the government is obligated to pay you back via these programs when you need them.

Republicans do you want to cut mandatory programs? Social Security, Medicare, Medicaid, Unemployment? No. Every time a microphone is in front of you the only thing said about these programs is how fervently you’re going to protect them.

Ok, then what about non-mandatory (discretionary) spending, the Blue slice? Here’s how that breaks out:


Here we go, some things Republicans are willing to cut.


No, not the GIANT “Defense” piece that takes up half the chart, that Republicans want to add to by the fistful, I’m talking about the fine print stuff in the “Other” section; Housing Credit Program, Science, Community Development. Or maybe the Education budget, who needs an art/music program right?


That or Republicans talk about the "waste, fraud and abuse" that's near impossible to pin down, and likely isn't big enough to right the ship if we eliminated all of it. I agree that we need to remove it, and I think efforts should be made to do so, but the fairytale that we don't need to make any hard decisions, we just have to hunt that illusive bigfoot and all our problems will be solved, is a false narrative.


So that's the Republican answer to this dilemma, trim around the edges and hunt bigfoot. Problem solved you guys, medals of freedom all round. So strong, so brave.

HERE'S WHERE THE DEMOCRATS FAIL ON THIS

In practice, the only reason Democrats pay the deficit any mind is because it's used as a weapon against them. Democrats try to fend off that criticism by attempting to raise taxes to offset the cost of program proposals like Universal Health Care, Free College, The Green New Deal, etc.


I'll credit them that they're at least acknowledging the concept of balance, which is different from the "cut taxes, raise spending" Republicans. There are two issues here however:


1. What they propose are things we're not in a position to buy, even if they sound great and are proposed with the best of intentions.


Although it's good they make an attempt to pay for them, they're creating unnecessary future hardship by overextending the country beyond it's means. Unless it's an existential threat there should be far more scrutiny on whether or not the Government should step into a situation by borrowing money. Too often we're buying things we want, not necessarily things we need by strict definition.


I'm not a purist, I'll readily admit that. Sometimes Government intervention is the best of bad options, like food stamps being a necessary evil to feed people in actual need. People game that system, it weakens neighborhoods by undermining the necessity of community and family, and it has an impact on people's motivations, but it still beats the alternative of Americans starving in the streets.


The contrast I'm trying to illustrate is that most Democrat proposed Government programs don't often fit that criteria of a "necessary evil." They're more accurately described as a "popular want." The Democratic party excitedly rushes towards those "popular wants," often with reckless abandon.


2. Democrats either miss, or don't believe, that adding government to an industry rarely has the desired effect.

There are real issues that Democrats are attempting to address; people dying unnecessarily early because they can’t get proper medical care, people being limited in their ability to advance their position in life because they don’t have access to educational opportunities, wanting the planet to survive humanity, etc.

What you get for your tax dollars however is usually inefficient, and often ineffective. Some percentage of every dollar that passes through a government program goes towards people gaming the system, corruption, and all the other nefarious things that come along when human beings interact with money in an environment with limited accountability.


The combination of these two factors, in the context of this conversation, is that the Democratic party really isn't in the deficit reduction game in a meaningful way.


And before I hear about Bill Clinton overseeing the last Budget Surplus in American history yes, that was great and good job, but he was also riding the advent of the internet, so unless Al Gore wants to invent another Internet every time a Democrat takes office I don't think we can consider that a trend.

SO WHAT CAN WE DO?

…nothing …build a bunker maybe?

I honestly think it's possible we’re past the point of no return when it comes to our debt. The American people generally don't take the time to fully understand this issue, so it’s easy to manipulate someone into thinking it’s the Democrat’s fault or the Republican’s fault with a few well placed talking points.

“Democrats just want to give everything away for free! Food stamps and Obamacare are why we have a deficit!” or “Republicans are cutting taxes again for their already rich donor class, they can trickle down my butt!”

It’s both their fault. It’s our fault. We refuse to make the hard decisions, and they only get harder with time.

The best thing you can do, besides the bunker, is to A) stop looking at the Stock Market as an indicator of the financial health of the country and B) don’t drink either party’s Kool-Aid when they say it’s the fault of the other guy.


Even if they’ve got concrete examples look at the numbers they’re talking and compare it against total US expenditures. You’ll quickly realize that arguing over a few million here, and a billion there, is like arguing over the placement of deck chairs on the Titanic. The scale I grew up with in the 80s, 90s and early 00s is no longer valid. Unless you're talking about hundreds of Billions PER YEAR the figure is near inconsequential.

Be ready when Social Security isn’t there at the time of your retirement. When Medicare isn’t there. At some point the bill will come due, and each generation that does not take this on is simply punting the ball to the next.

This is why I joined the Libertarian Party over a decade ago during the Great Recession. Neither of the two major parties is even remotely capable of talking directly about, much less solving this issue.

The Libertarian Party is an odd bunch. I swear every time I’ve been to a meeting I end up in a conversation with someone explaining why 9/11 was an inside job, but as much as it’s a big bag of crazy they’re the only people that can have an adult conversation about the national debt, the only issue that’s going to matter if you want America to still be America in 100 years.


Go re-register Libertarian. Vote for whoever you want, but at some point enough of us have to make it known that a 3rd party is needed to break the cycle.


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