· The levels of debt we are reaching are economically unsustainable. We used to talk of “tax and spend liberals” as a pejorative, but looking back, at least those politicians were honest about the sacrifice they asked of the public. These days, politicians pass spending bills funded by debt instead of taxes, hiding the sacrifice until well in the future when our kids and grandkids will not only have to pay the bill but also the accrued interest.
· This problem can no longer be kicked down the road. Every year we fail to address it makes a solution harder. We are already seeing increased inflation, and while a part of current inflation is due to COVID-related logistics problems, reliable economists and journals have shown links to previous government COVID relief spending and the Federal Reserve’s quantitative easing policies. The Federal Reserve’s balance sheet is heading towards ten times what it was in 2000, and our money supply has more than quadrupled. Such monetary expansion will continue to push inflation no matter what supply chains do. We have only avoided pain in the recent past because of problems in the Euro Zone and a lack of safe investments outside of the U.S., which has pushed international investors to continue buying U.S. assets and support the dollar’s value.
· Too often, spending is framed in the terms of “government should meet this or that need”. I believe it’s useful to remember that there is no such thing as government money, there is only your neighbors’ money that government has taken from them. Rephrasing any spending proposal as “my neighbors should pay for that” brings clarity to what should be communal spending. “My neighbors should help me pay for our roads”… “or our hospitals”… “or our military”, are all reasonable propositions. “My neighbors should pay off my student loans” doesn’t seem reasonable or fair.
· Even Western European welfare states who offer huge benefits, in exchange for huge taxes, do not have the national debt levels we have reached in the U.S. Some Nordic countries have debt levels of only about 50% of GDP, compared to nearly 130% of GDP here. Additionally, much of the funding for social benefits in Europe comes through Value-Added Taxes (VATs) that are similar to sales taxes. While most Americans would balk at a tripling of sales taxes here to match European levels, at least such taxes spread the costs throughout society and give people at all income levels a sense of what European-style government benefits cost.
· We need to explore the use of zero-based budgeting for federal departments, in which programs need to be justified every budget cycle, which would allow more focus on funding programs that can prove their effectiveness. To solve our debt problems, we also need to audit and scrutinize all spending, from social programs to military expenditures.
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