By John Ubaldi–
During his nationally televised State of the Union address to the nation, President Trump failed to mention how his administration would tackle the enormous national debt, even former Democrat gubernatorial candidate from Georgia Stacey Abrams failed to mention in her rebuttal failed to even mention it.
Before Trump assumed the presidency, the national debt was about $20 trillion now it stands at over $21 trillion. Neither party has even remotely focused any concerted effort to even tackling this immense national security threat, instead the debate centers around more federal spending.
Republicans and Democrats Blame Each Other
Both sides blame each other for the increase in the national debt with Democrats blaming Republican’s for cutting taxes, but the non-partisan Congressional Budget Office CBO) issued a report in January 2017, stating all public policy remained the same the federal budget deficit would still head back into the trillion dollar range as was the case for a few years after there the 2008-09 financial collapse, with the national debt also growing at an accelerated rate.
Numerous reports by the CBO have directed one of the significant causes of both the national debt and the federal budget is significant rise in entitlement spending of Social Security, Medicare, Medicaid, interest on the debt and finally health care costs. Both parties have failed to address this with one party wanting to expand these programs the other unwilling to address it.
Tax Cuts not the Cause of National Debt
Others will cite the tax cuts as the primary driver, but the federal government collected a record total amount of revenue in the first quarter of 2019 fiscal year, and if one tracks historical trends each of the previous tax cuts passed from President Kennedy in 1964, President Reagan in the early 80’s to President Bush’s in the early 2000 each had a positive impact on the economy.
Many cite the high tax rates in the 1950’s as a bellwether that the U.S. can sustain over 70% marginal tax rates and still have a vibrant economy. From a historical perspective this is only half true, as during this period the nation’s highest tax rate was 90%, but what is missing in this argument is that very few people paid it as there were enormous amounts of deductions, which meant very few people actually paid the high rate.
One also has to look at the historical aspect of this period, the United States just came out of World War II as the only viable economy with the rest of the world still recovering from the war, and during this period from 1949 through 1961 the U.S. experienced four recessions in eleven years. One only has to look at the U.S. economy after the Kennedy tax cuts in 1964 were fully implemented.
Federal Spending never reduced
The unfortunate downside after each tax cut federal spending has never been reduced in any measurable way, the federal government just keeps spending at a blistering rate. Both Republicans and Democrats talk about reforming spending but it just never happens.
Currently the United States is preparing for the 2020 presidential election and a vast array of diverse candidates have announced their intention to replace Trump as president, and so far none have mentioned any policy to reduce the nation’s enormous national debt. All we have heard so far is more spending!
On Thursday, Democratic Congressional Representative Alexandria Ocasio-Cortez along with Massachusetts Democratic Senator Ed Markey announced there “New Green Deal” initiative that would fundamentally alter the entire U.S. economy by moving the U.S. completely away from fossil fuel to 100% renewable energy by 2030.
More Federal Spending is on the Way
The estimated price tag is hard to quantitate at $7 trillion, but this is only a bare bones cost as the full price has not been fully digested as Cortez hasn’t released its full cost effects yet.
So far four Democratic candidates who have announced have pledged their support for the “Green New Deal. Massachusetts Democratic Senator Elizabeth Warren, New York Democratic Senator Kirsten Gillibrand, California Democratic Senator Kamala Harris, and New Jersey Democratic Senator Cory Booker all have signed on to this proposal.
Other proposals that have been pushed by progressive Democrats is a “Medicare for all” health care system, with the libertarian-leaning center Mercatus Center at George Mason University estimating that a Bernie Sanders like plan would cost the government over $32 trillion over the next ten years.
Even the “Urban Institute” calculated “Medicare for all” at $32 trillion with the taxes the Sanders plan anticipates being raised pegged around at $15 trillion far below what is needed.
Let’s Spend some more
Other policy think tanks have examined other progressive proposal with the liberal leaning Tax Policy Center analyzing there Social Security expansion which includes higher cost-of-living adjustments and higher minimum benefit levels, with a price tag of $188 billion over the next decade.
Even the proposal of “free college” which has been proposed by many Democratic candidates for president and from those in the Congress, with the same think tank estimating the cost to be $807 billion over the next decade, which would primarily benefit wealthy families not those where the need is the greatest.
The Tax Policy Center gauged other progressive polices such as support for 12 weeks of paid family leave for new parents and to include those with serious health conditions comes with a hefty price tag of around $270 billion.
The Cost of Federal job Guarantee
Spending continues unabated as incoming freshman Congressional representative Alexandria Ocasio-Cortez and other Democrats want to provide a federal job guarantee for anyone who wants one at $15 per hour with benefits. The Center on Budget and Policy Priorities put this proposal which was commissioned by outside scholars Darrick Hamilton, William Darity, and Mark Paul would cost the taxpayers around $543 billion annually.
Total cost of all this new spending is roughly over $42 trillion over the next 10 years, with all this new spending it would send the national debt into the stratosphere, and cripple the U.S. economy.
No Serious Discussion about Spending Reform
The focus of Washington has always about spending without any serious discussion about reforming federal spending; as the federal government operates in the 21st century but functions in a pre-technological age utilizing mass employee’s and inefficient equipment.
After the government shutdown ended it was revealed that 92,000 federal employees make more than the governors of the state they reside in, with over 1,000 clerical workers in Alabama making at least $120,000 as much as the governor of that state.
Democrats Support Large Federal Work Force
The problem is that both Democrat’s and Republican’s benefit from the broken system, with Democrat’s not wanting to reform the federal government as this means less federal workers which equates to less union dues to the federal unions which almost exclusively donate to Democrat campaigns.
Republicans Refuse to Reform Pentagon Spending
Republican’s on the other hand are unable to overhaul and reform how the Department of Defense operates, as this relates to procurement, acquisition, and financing that would ensure the taxpayers money is well spent, unfortunately this isn’t happening.
At the end of last year Ernst & Young and other private firms were hired by the Pentagon to complete an audit mandated by Congress and they were unable to complete the job.
The main reason for this failure per the firms conducting the audit is that the DOD financial records were so riddled with bookkeeping deficiencies, irregularities, and errors it was impossible to continue if a reliable audit was to be completed accurately.
If the federal debt is ever to be reduced both Republicans and Democrats need to put their partisan ideologies to the sideline and address the real cause of the national debt and that is out of control federal spending.
Partisan economic policies and over promising to the American people of unrealistic programs will only send the debt into “Greece” like territory, if we want to be like Greece and face the calamity of their failed economic and uncontrolled spending has wrought then keep doing what we are doing.
Unfortunately, if we don’t address this now we will be forced to do it later and the medicine will be extremely bitter.