I have often wondered how anyone could adopt a position of frugality, living within one’s means, and fiscal restraint as being good for individuals and businesses but not for the government. That embodies a dualism that is dangerous and destructive for the nation and her citizens. Unsustainable debt harms the very people the debt was supposedly designed and purposed to help. In our personal lives or businesses if we incurred debt that would outlive us and becomes a burden on our heirs that would jeopardize their ability to pursue Life, Liberty, and Happiness.
The federal government’s increasing and continuing debt will impact multiple future generations negatively. That is an issue that no one on the left and too few on the right is discussing or even seem willing to address. When the volume of debt reaches the levels, it has today it places every American and most assuredly every taxpayer at great risk financially. I have l long been an adversary of “Baseline Budgeting” and an advocate of “Zero Based Budgeting.” One perpetuates debt (Baseline) and the other offers a path to financial freedom. In our federal system, the politicians are not just advocates of “Baseline Budgeting” but fierce defenders of that system. The reason, in my view, is to ensure their ability for cronyism, corruption, and bribery as it increases their power.
Politicians on both sides of the aisle seem to have adopted the view that it is government’s privilege and responsibility to ‘redistribute the wealth’ of its citizens, taking from those deemed to have and giving to those who lack. It never considers the reasons those who have were able to amass wealth or the reason for not having risen in economic status. The excessive debt of America, created by the politicians, wears down the very spirit of enterprise and entrepreneurialism that is required in developing a strong economy. It also increases the opportunity for corruption and perverts our entire system of government. That should be so appalling to every lover of freedom that we rise up in resistance at the voting booths and FIRE the offenders in Congress. It would only take a few election cycles for us to get the attention of the politicians and bureaucrats and we might see a move toward fiscal sanity.
Our politicians and the non-elected bureaucrats have created a situation where we have incomprehensible debt through loan guarantees, stimulus, entitlements, and subsidies. Our government guarantees loans for so many areas the danger is clear even to those not trained in economics. We have housing guarantees, subsidies and guarantees in agriculture, energy, transportation, education, and many other areas. Our government insures banks, credit unions, pension funds, the decline in agricultural production and more. It is so frightening that the “Bailout Barometer” of the Federal Reserve Bank of Richmond estimates that 61% of ALL LIABILITIES in our financial system are explicitly and implicitly backed by the government. Who is that? The Taxpayers!
Current loan guarantees exceed $18 TRILLION. Many politicians and some economist argue that government lending is essential to achieve economic growth. They contend that it mitigates the imperfections of the market. That is wrong, in my view, for when the government becomes involved in private industry that industry becomes public and we all know how inefficient government has proven to be. The Department of Education alone has approximately $1.3 TRILLION in direct student loans outstanding and there is almost $75 BILLION in default.
When government the makes loans, it relieves the requirement for a business to compete for the loan based on merit it is dangerous. In the private sector ‘profitability and creditworthiness’ are essential but not so with the government. Private banks and investors want to make a profit but the government is interested only in tax revenues and a measure of control, not sound business models. We have been exposed to that on more than one occasion during the previous administration, but not limited to Obama for Republican and Democrat administrations followed the same path. The default rate on government loans is over 20% and that is an untenable level but is ignored by the politicians and our debt continues to grow as we lend money to unqualified businesses.
Some have stated that the government lending machine is nothing more than a Credit Racket that is destroying our economy and thereby our Republic. The government has commandeered business after business temporarily or long-term through subsidies, loans, grants, or stimulus offerings. Excessive National Debt is destroying our nation and if we do not change our budgeting process and find fiscal sanity we will so burden future generations that only the super-rich will survive financially. They will survive only because they are super-rich. The middle-class and poor will become so poverty stricken that without governmental handouts they cannot survive. Sadly, in that state the government will be unable to sustain them so the nation will crumble under the financial burden that politicians for decades have laid upon the backs of the taxpayers. ENOUGH IS ENOUGH!
God, bless you and God bless America!