Photo Credit: Gage Skidmore/Flickr
By Rick Manning — The economic news continues its grim march toward a reality that many believe may not be in the fixable category.
Preppers, who store foodstuffs and buy hard metal assets, have become mainstream as even Costco offers a wide variety of buckets filled with bulk food that are guaranteed to last for 20-25 years.
Gun sales are at record levels as people who never would have dreamed of getting a firearm are considering their needs in a society where the police might not be there to protect your family.
The Los Angeles Times features links to article on their websites “rest of the web” section featuring economists declaring that we are already in an “economic death spiral.”
The facts are indeed scary:
- Our nation’s official $16 trillion national debt is now larger than our entire economy, putting America in a debt spiral that threatens to bankrupt the country.
- Our nation will run a trillion dollar deficit once again this year.
- Gross interest payments on the national debt are approaching half a trillion dollars every year.
- The employment situation is only slightly better than during the last half of the Great Depression.
- The European economy appears to be in near meltdown due to excessive government borrowing and a debt spiral that virtually ensures that multiple countries will actually go bankrupt.
But are these truths so devastating that our nation’s economy cannot recover, and Americans should just accept ever dwindling expectations and lifestyles?
Not if we choose to get control over our budget now.
If Representative Paul Ryan’s budget was followed for the next decade, the debt to GDP ratio would fall to 88 percent within ten years, and this is with relatively modest economic growth projections.
Obama’s rejected budget would also purportedly get us back to where we are today, just over 100 percent debt to GDP by 2022. Obama relies upon more aggressive economic growth assumptions than Ryan to make his numbers work.
Of course, for Obama’s budget to succeed, you would have to believe that the economy will grow at twice its current rate over the next ten years. This growth must occur in spite of massive tax increases imposed through Obamacare and on the personal incomes of those very small business job creators who are the nation’s economic engine. Hardly a likely scenario.
The bottom line is that the federal budget has continued spending around $3.6 trillion a year since Obama became president. Before he became president spending was just under $3 trillion. The increased spending is in large part locked in due to systemic cost changes created by the Pelosi-Reid Congress that lowered eligibility standards for safety net programs opening them up to many more people. As a result, annual spending will rise to $6 trillion by 2022.
This built-in spending has to be tackled in order for America to return to prosperity. Today, it is government spending itself that is sucking the life out of the economy. It is the constantly increasing hundreds of billions of dollars sent to China, Japan and financial institutions who purchased our debt each year that gnaws at our nation’s future viability.
And, finally, some economists are beginning to come to the somewhat obvious conclusion that the bloated federal budget actually chokes out the very growth needed to increase the total revenue collections needed to feed it.
For those who worry that our nation’s financial system might fail, the only adult choice is to support budget cuts now. While the Ryan budget is too tepid for my tastes (it doesn’t get to balance for forty years), it does drive the percentage of debt to GDP down below the 100 percent level in five years, crowding government out and re-tooling the tax code to encourage job creation and growth.
Many families have to make hard economic decisions in their own lives. Each of us knows that if each month, our credit card balance grows by four dollars for every ten dollars we spend, we are headed for real financial trouble.
Each of us knows that when we pay only the interest on a mortgage, we never own our home.
When faced with too much credit card debt, we cut back on our spending, eat at home more often, delay a vacation or new car purchase, and start paying more than the minimum payment due. Eventually, with hard work and time, the debt is paid, and we are no longer slaves to stuff we purchased long ago.
America needs to do the same by setting spending priorities and sticking to them.
Can America still afford public broadcasting? If not, it should be eliminated. Can America still afford to have around 2 million federal employees? Can America still afford to promise the current, expensive Medicare system to future generations of seniors, or does it need to be changed to make it more affordable in the future? Can America still afford to have military bases located throughout the world, or should some of these be shut down?
These are just a few of the thousands of spending priority decisions that Congress needs to tackle.
The gloom from the specter of an ever increasing debt burden that eventually collapses the entire U.S. economy need not be prophetic. The spending decisions over the past six years, need not destroy more than 200 years of economic liberty.
But only if America chooses to face the problem and make some tough decisions now, before prepping becomes the only rational choice.
Rick Manning is Communications Director of Americans for Limited Government.
