It’s a given that this bill won’t pass muster in the Democratic-led Senate, but at least the Republicans attempted to reduce wasteful spending in the future. Isn’t the concept of a debt ceiling meant to stop spending at a certain point to avoid default and a government shutdown?
The ceiling should be a stopping point, which is over $31 trillion at this juncture. You don’t punch through the ceiling into the attic and then out through the roof into the atmosphere. Although the nation’s GDP increases over time, politicians ought to resist the temptation to borrow and spend as if money grows on trees. The Treasury can keep printing money, but what are the consequences of this spending spree?
Try to visualize members of Congress managing their own household finances the same way that they spend other people’s money. Most would take care of their debts and strive to maintain a revenue edge over expenditures. However, in their day jobs, they surrender to budget requests from government agencies and special interests in their local and state constituencies.
Unfortunately, the debt ceiling keeps rising due to deficit spending. The last time a balanced budget was forged occurred during President Bill Clinton’s second term in 1998. There is no sane reason why a balanced budget cannot be negotiated in the future if both parties would get serious about spending priorities and terminate redundant programs.
There is plenty of time to carry out hard bargaining since the federal budget runs from Oct. 1 to Sept. 30 in each fiscal year. If the government continues its runaway deficit spending, the Fed will raise interest rates which in turn triggers inflation. We would be foolish to think that profligate spending habits at the federal level don’t adversely impact the private sector.
A number of banks have gone belly up due to risky investments and loans. First Republic, Signature Bank and Silicon Valley Bank were shuttered due to woke capitalism, and there could be other failures down the road. Even “too big to fail” banks must tread carefully during these turbulent times. When consumers become aware of all the negative spending, they hold on to their money and are hesitant to invest or spend. That in turn reduces business expansion, marketplace productivity, and tax revenue for government coffers.
All of these actions are similar to a vicious cycle or perfect storm that can generate recessionary trends. That is why it’s crucial that Congress and the Executive get a handle on the deficit, interest on the debt, and overall federal debt. A concerted effort by both sides of the aisle could avoid the practice of merely passing continuing resolutions that temporarily pay the government’s bills. Tax hikes aren’t the answer as they punish growth and productivity. Reduced government spending is a sounder policy in chipping away at the debt.
According to America’s founders, the purpose of the yearly budget was to protect liberties and fund a national security apparatus. Along the way, politicians lost their focus on Constitutional guardrails and added government social programs that should have been administered by local or state governing entities and the private sector. Currently, the federal behemoth is bloated and almost impossible to manage or place on a weight loss program.
Moreover, scores of Congress members somehow get wealthy on their government salaries. How is that possible without the role of crony capitalism or influence peddling? They have turned away from representing voters toward self-interest and ignored John F. Kennedy’s wise words. He stated, “Ask not what your country can do for you. Ask what you can do for your country.” It’s way past time for Congress to return to service in the national interest.
Today, America needs more politicians like former Congressman Jack Kemp (R), who was also an NFL quarterback with the Buffalo Bills. He was a fiscal hawk during the Reagan and Clinton administrations. Kemp, along with Congressman Newt Gingrich (R), preached the policies of supply-side economics (free markets) and balanced budgets. Calvin Coolidge also applied these principles in the 1920s.
Gingrich and Kemp persuaded Clinton to transform welfare into workfare. They understood that if government lives within its means, and simplifies the regulatory and tax codes, economic growth can be unleashed. Economists such as Claude-Frederic Bastiat, Milton Friedman, Ludwig Von Mises, Friedrich Hayek, and Thomas Sowell also delineated these pro-growth principles.
In order to tackle the debt, we can be guided by prior wisdom but also look to the future. We must not saddle current and future generations with a suffocating debt trap. It is a poor example to set for the individual states and business enterprises. It also hinders innovation and dynamic prosperity.
