The Looming Crisis

mike1

Controlling our national debt is arguably the greatest domestic challenge America will face in the coming generation.  New York Times columnist David Brooks explained that, “Countries decline either because they lose wars or they get buried under their own debt.  Special interests lock in special favors and under the weight of those accumulated commitments, they sometimes collapse.  The debt is our single biggest problem as we go forward for decades and for generations.”[ref] Brooks, David. “Voices for Fiscal Action – David Brooks.” YouTube. Committee for a Responsible Federal Budget, 16 Jan. 2012. Web. 15 Aug. 2015.[/ref] The problem is that Republicans refuse to raise taxes and Democrats refuse to cut spending.  The vendetta is how to cut spending and raising taxes while maintaining American financial commitments. 

Alexander Hamilton said that a “national debt, if not excessive, will be a national blessing.”[ref]Past & Present: Alexander Hamilton and the Start of the National Debt [/ref] As the American government pays off interest on debt, the US develops a high level of credit.  This leads to greater investment in the American economy and allows the government to borrow money.  However, too much debt can threaten the economy and the value of our currency.  An example of this occurred in the early 1950s.  By 1952, the US had had twenty years of significant deficit spending with the New Deal, World War II, the Cold War, the Fair Deal, and the Korean War.  The debt to GDP ratio was 1.27, which resulted in a 14% inflation rate.[ref] Breyer, Stephen G. The Court and the World: American Law and the New Global Realities. Penguin Random House, 2015.[/ref] The Eisenhower Administration built the Interstate Highway System in response to this crisis.  Government spending stimulated the economy, and constructing the highways acted as a massive stimulus program.  The highways made it easier for companies to sell their products in other parts of the country.[ref] Zucker, Michael. “The Road Not Taken.” Political Vendetta News Network. 6 Jan. 2016. Web.[/ref] This led to greater consumption, greater competition, and more tax revenue for the government.  The government wisely used this revenue to pay down the national debt until the debt to GDP ratio was under 0.2.[ref] Hartmann, Thom. “Eisenhower Was An Idiot.” YouTube. Russia Today, 17 Sept. 2012. Web. 22 Aug. 2014.[/ref] This doubled the spending power of the dollar and turned the 1950s into the most prosperous decade in American history.[ref] Peters, Gerhard. “Republican Party Platforms: Republican Party Platform of 1956.” Republican [/ref]

The current national debt crisis originated with Eisenhower’s successor, when President Kennedy proclaimed that balancing the budget was a “misleading mythology” in order to sell his tax cuts and spending increases to Congress.[ref]Caro, Robert. “Passage of Power.” On the Issues. 1 May 2012. Web. 18 Nov. 2015.[/ref] This precedent has had long-term consequences.  President Bill Clinton is the only president since Eisenhower to balance the federal budget.  The frequent annual defects have accumulated a large debt.  The bulk of the current debt was created through the heavy domestic spending of Presidents Johnson and Obama, and the tax cuts and military spending of Presidents Reagan and George W. Bush. The current annual deficit is half a trillion dollars.  The current national debt is $19.8 trillion.

The US must act before it can no longer pay the interest on an ever-growing debt that will result in a loss of credit and a weaker dollar. The first step is to bring in more revenue by ending tax loopholes and establishing penalties for moving money overseas.  Raising taxes cannot solve this problem alone.  The government spends between three and four trillion dollars a year and this needs to be downsized.  Spending needs to be cut surgically.  Nothing can be held sacred.

A debt czar needs to be appointed that would go through the budget and remove unnecessary programs.  Eliminating corporate welfare is a step to cutting government spending.  This costs taxpayers $100 billion annually and most of this money could be better used balancing the budget.[ref] Zucker, Michael. “The Corporate Welfare State • Political Vendetta News Network.” Political Vendetta News Network. 28 Oct. 2015. Web. 18 Nov. 2015.[/ref] Another step is to end the War on Drugs, which costs the federal government and the states $40 billion annually.[ref] Zucker, Michael. “The Modern Struggle • Political Vendetta News Network.” Political Vendetta News Network. 30 Sept. 2015. Web. 18 Nov. 2015[/ref] The United States should also close foreign military bases that are no longer vital to national security and are relics of earlier eras.[ref]Zucker, Michael. “The Sun Never Sets • Political Vendetta News Network.” Political Vendetta News Network. 23 Sept. 2015. Web. 18 Nov. 2015.[/ref]  The country needs to reform the military budget.  America spends nearly twenty percent of its annual budget on the military, some of which is used to create jobs in certain Congressional districts.  Excess weapons are produced and usually sold overseas or given to the police departments, resulting in their militarization.  The Pentagon’s budget must be reduced to what is truly needed by the military to pursue America’s interests.[ref] Zucker, Michael. “Too Many Tanks • Political Vendetta News Network.” Political Vendetta News Network. 16 Sept. 2015. Web. 18 Nov. 2015.[/ref] Unchecked federal spending, even military spending, threatens our long term safely as a great nation.

The last part of the federal budget that needs to be addressed are the Entitlement Programs.  David Brooks argued, “One of the big obstacles to cutting is that the American people fear that they’re the ones who are going to get screwed, and somebody else is not going to be.  If you can spread the pain around with a big approach, it’s politically a lot easier than a small approach.”[ref] Brooks, David. “Voices for Fiscal Action – David Brooks.” YouTube. Committee for a Responsible Federal Budget, 16 Jan. 2012. Web. 15 Aug. 2015.[/ref] Across the board short-term cuts to entitlements of ten to fifteen percent should be considered.  The inflated growth of Medicare will be responsible for the bulk of the deficit in the future.  By 2020, Medicare will cost the nation $1 trillion annually.  One approach for lowering the cost of Medicare involves “replacing the fee-for-service system with more normal market incentives. Give recipients a choice among insurance options and have providers compete to offer comprehensive coverage like today’s Medicare… Under a demonstration project in Denver in the 1990s, private plans bid 25 percent to 38 percent less than government-determined payment rates.”[ref] Brooks, David. “The Policy Verdict I.” The New York Times. The New York Times, 8 Oct. 2012. Web. 18 Nov. 2015.[/ref]

Once the debt is brought under control, the need for any taxes that were raised to help pay down the debt could be reassessed.  A moderately sized government that keeps pace with inflation will be affordable.  Keeping the national debt at a reasonable level is vital for strength of our currency and the health of America’s economy and posture in the world.

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Authors

Michael Zucker is a sophomore at Occidental College in Los Angeles, studying history and political science. During high school, he authored three novels that are currently available on Amazon. He has worked as a political intern in Washington, DC, and considers himself a centrist on most political issues. He is most focused on issues surrounding the Iranian Nuclear Program, the National Debt and Mass Incarceration.