“Put it on the tab.” It’s a common refrain heard at bars and taverns. It’s done when someone expects to incur lots of charges upfront but will pay for all later, usually the same day. It’s seen as easier than pay as you go or pay by the drink. If you aren’t well known to the bartender or manager, you will likely have to leave your credit card to start a tab (i.e., credit). If you do know either well, your good word and/or past relationship of having “made good” may be enough to be allowed to take part in a spend now, pay later scheme.
The key point about this so-called tab (or bill), however, is it has to get paid. No loaner of money will continue taking part in a scheme where they either did not get paid or even think there is a possibility they might not get paid. Contrast that with our federal government, where Joe Biden and congressional Democrats insist on putting trillions in totally new spending “on the tab.” It’s just more deficit spending. Borrow more now, and someone else, namely future generations, will be responsible for paying it off later. What a scam. At least the drinker is the one who pays his own tab at a bar.
But it’s important to note how bad things are already, even before a dime of new road and bridge infrastructure or even a dime of the so-called human infrastructure, essentially a socialist wish list should get passed. For the fiscal year that just ended on September 30, 2021, the federal deficit was $2.8 trillion. That is the amount spent above what was collected in taxes. It was the second-highest deficit ever, just under the 2020 total. In short, for the fiscal year 2021, $4.0 trillion was collected, and $6.8 trillion was spent, leaving the $2.8 trillion hole. The Bipartisan Policy Center analyzes and tracks the deficit each month, and an easy-to-read analysis is here.
Americans are probably unaware of the fact that we can only afford about 59% of all the federal government we now enjoy if it were strictly “cash only.” With zero borrowing (i.e., no deficit spending), tax revenues of $4.0 trillion would allow for a mere 59% of the $6.8 trillion actually spent in the fiscal year 2021.
What would living within our means, as families must do with their own budgets, and people love to say we should do, really mean? Few would like it. Even deficit hawks who say things like “apply cuts across the board” or “cut everything equally” would be aghast at reality.
Say you work for the federal government as a program administrator, border patrol agent, park ranger, or an Army staff sergeant. Your modest $900 weekly pay ($46,800 annually) becomes $531 as we live within our means. Do you collect the average Social Security benefit of $1,555 per month? Next month’s check (and each thereafter) will now be only $917.
Of course, another application is to cut programs, not pay. Just have 59% of air traffic controllers on duty each day. How would that make the friendly skies? We could keep just 59% of the U.S. military on duty and fire 41%. Border patrol agents, FBI agents, federal corrections officers, federal meat inspectors? Just 59% left. The border, the FBI cases, those prisoners, and much of that beef will just have to be unattended or uninspected. We have to live within our means.
Of course, taxes can be raised or spending cut, but the above points to how difficult that will be. We are decades past cutting waste, fraud, and abuse and getting to a balanced budget. Get rid of foreign aid, you say? That’s a pittance of the federal budget at less than 1%.
Four programs plus interest on the national debt (for all past spending) make up 80 percent of all federal spending. These are Defense/Military, Social Security, Medicare, and Medicaid. These are the four generally considered “untouchable” by members of both political parties. No one wants to disrespect our troops or incur the wrath of veterans or the elderly who benefit from these.
But here’s the awful truth no voter likes to hear, and because no voter wants to hear it, no politician ever says it—even if you don’t touch those, and totally eliminate every single thing the federal government does outside those four areas, you cannot balance the budget. You would still have a deficit. We’d still be putting things on “the tab” for the next generation.
So what can be done? Politicians and the American people are long overdue to have a reckoning about how much government we want AND at the same time can afford? Every program has a constituency, be they seniors, farmers, or college students. If we want the programs for these and other groups, then we must pay for them. If we do not want to pay more, then they must be substantially curtailed, not just trimmed. Consider Medicare. It does not even come close to covering its bills through premiums paid by those enrolled and the payroll taxes collected. Premiums would need to jump substantially, or the services covered slashed significantly. Trimming gets one nowhere.
So there you have it. Balancing the federal budget is an ugly enterprise. It will never be easy. Embarking on a new spending spree for free pre-K and free community college and the like would make balance virtually impossible. [Note: no Biden or Democrat projected future budget shows it in balance.]
It appears we will continue playing the game we have for decades— using 59 cents in taxes and borrowing the other 41 cents for every federal dollar we spend— but for how much longer? All tabs come due. Individuals and countries (China included) who have lent and who continue to do so must believe they will get paid back plus interest. We’re on track to borrow more than 50% for each dollar spent. What happens when no one believes they’ll get paid back? What happens when no one will lend?
Jeff Szymanski works in political communications at AMAC, a senior benefits organization with nearly 2.4 million members. He previously taught high school government and economics for 15 years.