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Some Straight Talk About the Debt Crises

Posted on Thursday, August 18, 2022
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by Outside Contributor
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24 Comments
Debt

Congress has passed the Inflation Reduction Act. President Biden says this is a success story, in part because it will reduce the deficit by $305 billion over the next decade. IRA mainly reduces the deficit by raising taxes and regulating drug prices; the act increases federal spending and subsidies by nearly half a trillion dollars over this period. 

The budget reconciliation process has been used again to increase government spending and taxes, increase federal subsidies, and expand regulatory powers. Before we break out the champagne, it is time for some straight talk about the nation’s debt crisis. Legislation such as the Inflation Reduction Act will do little to change the nation’s long-term debt trajectory.

Federal debt now exceeds national income and is projected to increase to more than double our national income by midcentury. The United States has emerged as one of the most indebted nations in the world. In their long-term forecasts, the Congressional Budget Office clarifies that we cannot continue to muddle along, failing to address the debt crisis. Massive federal spending is creating zombie enterprises and zombie state and local governments that survive only with more federal bailouts. 

As the federal government borrows more money, this will cause interest rates to rise, crowding out private investment. The nation has already entered a new era of stagflation, combining higher inflation and lower economic growth. This retardation in economic growth will be accompanied by major economic crises comparable to those experienced over the last two decades.

Solving the nation’s debt crisis will require the one thing the president and Congress have been unwilling and unable to deliver: bringing expenditures into balance with revenues in the near term. Constraining the growth in federal spending will require fundamental reform in the major drivers of that spending — in addition to interest on the public debt, it is unconstrained growth in expenditures for the major entitlement programs: Social Security, Medicare and Medicaid.

It is not surprising that elected officials find it difficult to solve the debt crisis. The last time they enacted legislation to reform entitlement programs was during the Reagan administration. Since then, they have not been willing to discuss, let alone address, the unfunded liabilities accumulating in these entitlement programs. A few members of Congress have introduced legislation to constrain the growth in federal spending, but that legislation will not likely be reported out of committee, let alone be introduced on the floor for a legislative vote. Our elected officials have become what Arnold Schwarzenegger described as girly men, unwilling to touch the third rail of entitlement reform because it could cost them an election.

The longer we wait to address the debt crisis, the worse these negative effects will be, effects that fall disproportionately on younger people and lower-income families. Three decades from now, our grandchildren will ask the obvious questions. How could our generation leave them with bankrupt trust funds in the entitlement programs, resulting in lower entitlement benefits over their lifetimes?  Why did we continue to borrow to finance entitlement programs benefitting our generation, leaving their generation to foot the bill?

It is time to recognize that under current law, the president and Congress are not up to the task. Ultimately, it will be up to all citizens to work with state legislators to solve the nation’s debt crisis. A major step in that direction was taken in Congress with the introduction of House Concurrent Resolution 101, calling for an Article V Convention of States to propose amendments to the Constitution.

Lead sponsors are Rep. Jodey Arrington of Texas, who introduced the legislation, and co-sponsors Rep. Brian Fitzpatrick of Pennsylvania and Rep. Yvette Herrell of New Mexico, all Republicans.  A companion Archivist Article V Application Counting & Calling Act is designed to ensure Congress complies with its ministerial mandate to call an Article V Convention “upon the application of two-thirds of the states.” These resolutions are a significant victory in the fiscal responsibility coalition’s campaign encouraging citizens concerned about the debt crisis and its effect on future generations. These groups support a state-drafted, voter-approved, inflation-fighting, fiscal responsibility amendment to the Constitution.

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Rich
Rich
1 year ago

Article V Convention of the States… be careful what you wish for. This could backfire.

David Millikan
David Millikan
1 year ago

$305 Billion in a decade DOESN’T even cover the Interest on National Debt for 1 Year today.
Their FANTASY WORLD math is just that…FANTASY WORLD.
But RAISING TAXES cures everything in their FANTASY WORLD.
Leaving AMERICANS with NOTHING and being SLAVES.
Compliments of DICTATOR Beijing biden and FASCIST liberals.

David Millikan
David Millikan
1 year ago

Don’t forget that the FASCIST liberals want to RAISE INCOME TAXES to 90%.
NO BS.

Terri M.
Terri M.
1 year ago

Well, if we were not paying people to not work, were not providing complete financial support for the several million new dependents crossing our southern border, providing billions to Ukraine while our veterans and families live on the street and then funding 87,000 new armed tax soldiers to make tax war on already strapped taxpayers, maybe the deficit might be lowered a bit. It would help to stop paying federal benefits to anyone who is not a citizen. It would help to not bail out entitled college students who borrowed way more than they can ever pay back for useless degrees with no real jobs at the end and who end up working at Starbucks or call centers. There just aren’t too many good paying jobs for social justice warriors or gender studies graduates. The biggest and best thing we can do about this is to never, ever vote for another democrat ever. Not that the do-nothing PHINO’s are any better.

PaulE
PaulE
1 year ago

So rather than addressing the root cause of the problem of runaway federal spending that is directly driving our national debt higher and higher, what is being pitched once again is an Article V Convention of States to start amending the Constitution of the United States that is NOT BROKEN. Rather than firing the members of Congress who routinely disregard the calls from the people to limit spending and control the expansion of the federal government, because most politicians know the American people are to sheep-like to kick them out of office, the magic answer is instead lets start playing with the Constitution, that isn’t broken, and make a really bad change to it that will do NOTHING to change the habits of the Washington politicians that already ignore the peoples’ wishes.

Let me guess, what is being pitched a Balanced Budget Amendment at the federal level. However, it won’t work as you think it will because Washington, D.C. is and has been a Democrat controlled entity for decades and its wired to run like a Democrat controlled entity. At a minimum, annual spending hikes of 6 to 7 percent over the previous year’s budget spending are standard fare no matter who runs Congress. That means, at a minimum, tax revenue would have to increase by that percentage to just break even each and every year. Some of you out there might think this will force the members of Congress, who constantly put forth massive, unnecessary spending bills, to stop their actions, because the budget would have to be balanced each year. Forcing spending restraint on them. Well it won’t work that way and I’ll explain why what you’re trying won’t work as you intend it to work!

Look at the typical Democrat run and controlled states around the country. Most or all of them have a balanced budget amendment built into their state constitutions. Does this stop any of them from putting forth massive spending increases each year? No it does NOT! All they do is simply either raise existing taxes on their state residents or create new taxes and fees to generate the revenue they need to balance the budget. So all a federal balanced budget amendment would do is enshrine an annual tax increase passed by the Congress and the President onto YOU no matter which state you live in. If you want to end up looking like most of western Europe, with their flat tax rates of 55 to 75 percent on everyone, then go right ahead and support this nonsense. By the way, most western European countries already enacted some form of balanced budget amendment into their nations’ constitutions. Which is one of the key drivers to those very high income tax rates. Remember, once enacted it becomes nearly impossible to ever repeal and you will be stuck with your bad decision.

Hal
Hal
1 year ago

At worst Biden is a flat-out liar. I truly believe he doesn’t really understand the true nature of any action or regulation or law that come to his attention. He has been told what he should say with regard to anything related to his role in governance as POTUS. He is basically a zombie and an embarrassment to this Nation. At this juncture, the government is running with unknow leadership, and he is the puppet that brings it to public attention as if it were something of his doing. And the DemocRat Party rigged this by rigging his election. His term in office will always stand out in history as a farce.

Michael J
Michael J
1 year ago

Elected officials who we’re supposed to trust are spending our tax money faster than we can earn it but not fast enough for them to spend it.
So now they are able to take more of it and since trust isn’t a two way with politicians, we constituents get more IRS scrutiny because only elected officials know what’s best as evidenced by the inconceivable debt that no one will ever be able to pay off. Politicians are never held accountable for their incompetent behavior.

GAPatriot
GAPatriot
1 year ago

Please get over it. Our congress will. NEVER pass a balance the budget act. Lets fight for what can be won. Balanced budget ain’t it. Find another cause. MOVE ON

GAPatriot
GAPatriot
1 year ago

Two topics that are stupid to argue
1. Abortion
2. Balanced budget

Jeanette
Jeanette
1 year ago

I have to ask where the common sense is in DC?? They print money on a whim. Then tell us we need Solar

Queasy
Queasy
1 year ago

Just remember, if you hold a Constitutional Convention, you open up the entire document for potential change and that could spell disaster.

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