On March 8, 1962, at a joint House/Senate Republican press conference, discussing a bill to add a billion dollars to the federal payroll, Senator Everitt Dirksen of Illinois quipped, “A billion here, a billion there, a pretty soon you’re talking about real money”.
If the late Senator were alive today, what would be his take on the Congress and their spending spree during this pandemic? As of today, another $450 billion bill is ready to pass and get President Trump’s signature, this one primarily to help small businesses weather the COVID-19 storm. This is in addition to the three previous bills, which was topped by the $2.2 trillion CARES package which gives money to virtually all taxpayers, regardless of circumstances (and where’s mine, Mr. Mnuchin?)
Not only is this an unprecedented amount any Congress has authorized for any reason, including war adjusted for inflation, but has been done with the connivance of the party of fiscal restraint, the Republicans. These, led by a Republican Senate and a Republican President have continued to throw cash at the problem, with the spend and tax Democrats happily ready to vote for the bills, objecting only when they can’t add more money to the stimulus!
Now, some two months into this crisis, serious questions have arisen as to the effectiveness
of our efforts to stop the spread of the virus. These include the lockdown of our economy, the various successful medical advances to cure people affected by it and the social distancing being demanded of our people, along with some of the ridiculous rules some state governors have put in place. There is not enough room to catalog all the questions, but know that we are entering uncharted waters for the future of our nation.
In rough numbers, since I am not an economist, like Alexandria Ocasio-Cortez (AOC), the nation’s GDP is around $23 trillion, with a debt of about the same. Federal income ranges in the $4.8 trillion amount, which pays for the military, the entitlements (Social Security, Medicare and other expenditures fixed, including interest on our debt). This also pays the salaries of all government officials, such as Senators, Representatives, the Executive Branch and all the government drones we hire to keep the wheels of government turning.
Where does all this money we are now spending coming from? Taxes on individuals and businesses cannot pay for all the goodies doled out. Again, estimates range from $2 to $3 trillion every year will be added to the national debt, for the only place to get the money to pay for this is through borrowing it.
Both parties have paid lip service to fiscal austerity, but borrowing has been a way of life for the United States, beginning with the Revolution when we borrowed large sums of money from the French to fight against the British. To pay off this huge debt, Alexander Hamilton proposed a system of assumption of all debts of the states, in return for a national bank and taxing powers. This passed with a lot of acrimony, and the history of American debt was on its rocky road.
On 8 January, 1935, Andrew Jackson paid off the $37,000 of the national debt. On January 1, 1836, the debt began to grow again. That period of less than one year is the only time the United States, as a nation was debt free.
The Civil War was the next driver of large debt-ridden years, and the debt has only increased since then. With World War 1 and World War 2 and the great expenditures of the Cold War, our debt ceiling only increased.
So we come to 2020 with a debt that rivals our GDP, and for the first time it will eclipse GDP. Simply put, all the goods and services for one year will only barely cover our national debt, something that no government could do, to confiscate all the money earned to retire that debt.
So far, about $3.5 trillion has been “spent” in the four bills. Not specified in almost all news stories is how this is to be paid back, for it is borrowed money. One way is for taxes to rise, which they will. Other fees will go up, as much of the federal income is in user fees for various services. Some will urge the federal government to just print some more money to cover payment on the debt. But doing this, and this is Economics 101, just makes the existing money supply worth less.
It seems that paying off this debt will take generations, for such repayment will go on at a snail’s pace. Given that the political leaders are already talking about a fifth stimulus bill that might reach another $1 trillion, no one can even speculate how long that will extend the repayment period.
With no public statement about repaying this tremendous outlay of borrowed money, it is obvious our political leaders have no idea how they are planning to pay if off. So this is a variation of the old, overused cliché of “kicking the can down the road,” only this is the equivalent of the can being a full silo and down the road means kicked to future generations; our children and grandchildren and so on.
One solution would be to cut the rise in the entitlements, which neither Democrats and Republican will do, for those on Social Security, Medicare, Medicaid will just vote them out of office is that is threatened or done.
When this pandemic is finished, which it will someday be, we, the people need to demand answers. And, if not forthcoming, vote in a group of lawmakers which will make the tough decisions to put the nation back on a sustainable fiscal footing.