Will we be adults or children? The ugly truth about America’s spending

Richard Manning,

You can already hear the howling. 

Oh the humanity, Trump is killing Big Bird.

The world is in danger of climate destruction, Trump is ending payments to the Green Climate Fund that pays off foreign governments to support radical environmental proposals under the false flag of global warming.

The world is on the brink of chaos as the United States contribution to the United Nations is cut to the same level as every other Security Council member pays.

Here is the ugly truth.

We are twenty trillion dollars in debt. We have hit the debt ceiling and the federal government is taking what is called “extraordinary measures” to keep us solvent until Congress either balances the budget at current levels or raises the ceiling again.

Of the debt, more than a quarter of that money is owed to ourselves through IOUs issued to the Social Security and Medicare Trust Funds,  the Federal Reserve and other intergovernment entities, about 32 percent is owed to governments around the world, including approximately $1.1 Trillion to the government of Japan and $1 Trillion to China, and the remainder is owed to private banks and individual investors in everything from savings bonds to mutual fund holdings of government Treasury bills.

And the situation is not getting better.

The Congressional Budget Office reports that overall federal government spending has increased by approximately $1.13 Trillion over the past decade, while tax revenues have increased by $699 Billion with the result being a more than doubling of our national debt during the previous ten years.  To make matters worse, while the national debt has been skyrocketing, our nation’s economy has not grown by more than 3 percent since 2005 which used to be considered normal growth, causing our overall debt to GDP to increase to an unsustainable 107 percent.

Fortunately, we currently enjoy historically low interest rates, keeping total interest payments on the debt at a mere $433 billion, a number which dwarfs every discretionary budget expenditure except defense and is about 70 percent of the Pentagon budget.

The most alarming part of our nation’s interest costs, is that they are completely dependent upon demand for our government debt on the open market.

A January 2017 report by the Congressional Budget Office projects, “Because of rising interest rates and, to a lesser extent, growing federal debt held by the public, the government’s interest payments on that debt rise sharply over the next 10 years—nearly tripling in nominal terms and almost doubling relative to GDP.”

Add into this mix, the fact that our military has been stretched well beyond its capacity to fight a two-front war, strained from more than fifteen years of constant war fighting and political choices to defer development of big ticket items like a replacement for the nuclear weapon carrying Ohio class submarines even though the existing fleet is reaching the end of its effective life, and the only rational choice is to aggressively cut the discretionary budget now.

And that is what President Trump is proposing, difficult, but doable budget cuts beginning the process of reflecting the needs of the nation, not just the wants.

One of the big differences between and adult and a child is that a child cannot distinguish the difference between a want and a need.  But America can no longer afford to be fiscal children.

As the projected growth of interest payments on the debt threatens to crowd out other spending priorities, the time is now to change our nation’s spending habits with a recognition that the current debate on the discretionary budget only covers one-third of federal government spending.

The big battle for our nation’s economic security lies in how we are going to fix so-called “entitlement spending” which is untouched in the President’s budget outline, along with whether we will choose to lower our highest in the world corporate tax rate that stifles economic growth, job creation and overall tax collections. 

However, any hope we have to comprehensively change our fiscal spiral to insolvency will be determined by Congress’ reaction to the President’s budget proposals. If they ignore the combined challenge of a need for expensive military upgrades at a time when our deficits provide an existential threat to our nation, interest payments on the debt alone will dictate draconian choices in the near future.

America simply can no longer afford to pretend that we can continue on the current path, President Trump’s budget is a good starting point on our national decision of whether we are going to be adults addressing our nation’s true needs or children disconnected to the looming debt crisis.

It is that simple.