The national debt is rapidly nearing $29 trillion, which is 25% more than our entire economy, and is orders of magnitude higher if you consider unfunded liabilities of Social Security and Medicare. This threatens life as we know it and must be addressed now.
Since the start of 2020, the debt has increased by $5.2 trillion. And President Joe Biden has called for $6 trillion in new spending along with massive tax hikes that will hinder growth and add trillions more in debt. The most recent spending plans are the $1.2 trillion “infrastructure” bill, which is really a green-energy boondoggle, and the at least $3.5 trillion reconciliation package that has been described as “human infrastructure,” which greatly expands the welfare state.
This expansion of the welfare state is far more than President Franklin Delano Roosevelt’s New Deal or President Lyndon B. Johnson’s Great Society. Although these initiatives likely had good intentions, the results were a disaster with the former driving the Great Depression deeper and longer and the latter contributing to greater dependency and rising structural deficits.
President Biden’s Green New Deal would fundamentally transform America into something it is not, nor can it afford to be. Many progressives argue that the federal government can continue to deficit spend without consequence. While we expect this from progressives, where are the conservatives?
Both political parties share the blame for the rising burden of government that comes from excessive government spending.
For example, 19 Senate Republicans voted for the $1.2 trillion “infrastructure” bill that spends than 10% on conventional infrastructure such as roads and bridges.
The political calculus of this maneuver by Republicans is awful and troubling as Americans need elected officials to take fiscal responsibility seriously now. A great example is that by President Calvin Coolidge, who believed in the morality of a limited government and was the ultimate budget hawk.
Coolidge, along with his predecessor, President Warren Harding, made cutting government spending a priority. When Harding assumed office, he was confronted with the Depression of 1920-1921 and his response was to fight it by removing government obstacles of excessive spending and taxing, which helped get the U.S. out of that situation in a hurry. After Harding’s death, Coolidge continued Harding’s pro-growth fiscal conservatism as Coolidge regarded “a good budget as among the noblest monuments of virtue.”
For Coolidge, keeping a balanced budget with spending restraint and reasonable tax rates was not just sound economic policy but moral and constitutional, as it supported increased economic prosperity along with preserving life, liberty, and the pursuit of happiness.
Under President Coolidge, federal spending decreased by 0.4%, from $3.14 billion in 1923 to $3.13 billion in 1928. This means the budget declined by even more in inflation-adjusted terms and resulted in spending as a share of GDP declining from 3.7% to 3%, which compares with the astronomical $6.6 trillion for nearly one-third of GDP in 2020. As a result of cutting spending, Coolidge was able to lower the top income tax rate to 25% in 1926, as he noted that “You can’t increase prosperity by taxing success.”
The spending restraint, tax cuts, and faster economic growth helped the federal government run a budget surplus every year for a cumulative cut in the national debt over those seven years of $6.1 billion. As a result of Coolidge’s fiscal conservatism, the nation experienced the Roaring ‘20s because free-market capitalism was allowed to work much more than today.
“The very fact that the federal government has been able to cut down expenditures, decrease its indebtedness and reduce its taxes indicates how great is the accomplishment which you have made on behalf of the people of the nation,” noted Coolidge.
Although the budget has changed since Coolidge was in office, Amity Shlaes, noted historian and Coolidge biographer, wrote that “the pressure to expand programs was as strong [then] as it is today.”
Policymakers should follow Coolidge’s example and reduce spending. States such as Texas and Iowa have also proved that fiscal conservatism works, so the federal government should now do the same. The Texas Public Policy Foundation’s Responsible American Budget provides a blueprint to restoring fiscal sanity in Washington.
Excessive government spending and the national debt cannot be ignored. If America doesn’t change course quick, there will be catastrophic results for Americans and Western Civilization. This is not just dangerous; it is un-American and something that will keep us from leaving a legacy to be proud of.
We need Calvin Coolidge’s fiscal conservatism more than ever.
As if the $1.2 trillion “infrastructure” bill in Congress could not be worse, a closer look shows that among other bad ideas there is $125 million allocated to fund the creation of pilot programs to evaluate a federal vehicle miles traveled (VMT) tax.
The idea behind the VMT tax is to tax drivers for every mile they drive, which could address both traffic congestion and the increasing supposed shortfall in the Highway Trust Fund. This shortfall is caused in part by lower gas tax revenue (lower than some desire, that is) due to more fuel-efficient vehicles and the increased use of electric vehicles (EVs) that don’t pay fuel taxes, as well as by inflated costs of building and maintaining roads and bridges.
How would a VMT work? In short, it won’t. But let’s play along with the fantasy.
One method would be to require a GPS device in every vehicle which would transmit your vehicle’s data to the federal government. Thankfully, in 2012, the Supreme Court ruled that such a requirement would be unconstitutional.
A second method would be annual odometer readings done at vehicle inspections; this would likely just incentivize fraud. The IRS would have to assume the responsibility of auditing the odometers of roughly 289.5 million registered vehicles. Doesn’t that sound fun?
Oregon and Utah are two of the first states to launch state-level pilot programs.
Oregon’s VMT tax trial participants have three options to sign up for—two privately run systems and one administered by the state’s Department of Transportation. The private companies allocate devices to drivers which log location and distance travelled, then send out tax bills and remit the taxes to the state.
State programs operate on a small scale, while the proposed national system would require the feds to track hundreds of millions of vehicles.
Remember, the federal government does not have $1.2 trillion available, as some of the bill is being funded with unspent, previously authorized funds, but the new spending could add at least $250 billion to an already bloated national debt. Despite President Biden’s call to ease the financial burden on America’s lower-income earners, these policies will prove to be most detrimental to them.
Consider the ongoing 2018 Two-Hundred lawsuit against the California Air Resources Board (CARB) aimed at stopping the implementation of its multi-billion dollar “scoping plan.” The plan’s goals included a “net zero” emissions requirement, a numeric per capita threshold, a mandated VMT tax, and a “vibrant communities appendix.” The costs to fund this plan disproportionately harm low- and moderate-income families and negatively influence the state’s economy.
Such policies continue to drive up housing costs, contributing to their homelessness problem.
VMT taxes will place an additional financial penalty on low-income families who can’t afford to—or choose not to—live in urban centers. Urban inhabitants are forced to move out of urban areas, then charged even more for doing so by imposing a tax on lengthy commutes.
Gas and VMT taxes create an unnecessary burden on taxpayers, as they are funneled through third-party channels, increasing the costs. They also discourage driving, which will inevitably hurt employment and upward mobility. Both taxes increase the price of consumer goods and have a negative impact on economic growth.
The U.S. shouldn’t impose a VMT tax to make up for a lower gas taxes collected. Instead, transportation spending should come from general revenue, which it has since 2008. Also, more affordable ways of providing transportation should be considered instead of repeating the same costly mistakes.
The federal government needs to quit piling on new taxes and subsidies that hurt those most who can least afford less opportunities available to flourish. Instead, Congress should focus on unleashing the power of the free market to make energy (which affects everything we do) more affordable.
It is time to reexamine why such a large transportation-related deficit is automobile-centered and face the fact that it is unsustainable. Adding and raising taxes thrusts our constitutional republic towards an autocratic order, which along with irresponsible spending should be rejected in favor of responsible spending that better helps all Americans, especially low-income earners.
By administrative fiat, federal bureaucrats in the Biden administration at the U.S. Department of Agriculture (USDA) recently expanded food stamp handouts by almost 30%.
Yes, you read that correctly, your taxes are going to go up to pay for expenditures your elected members didn’t vote on.
And the expansion of these handouts from the Supplemental Nutrition Assistance Program (SNAP), while supposedly helping the less fortunate, too often creates dependency and sets people up for failure—much like many government programs. The success of welfare programs should be measured not by how many people are added to them but by how many people graduate off them and live prosperous lives.
With just a moderate work requirement and some eligibility reform, SNAP spending was curtailed by 16% as enrollees declined by 19% from 2016 to 2019. However, during the pandemic, Congress removed work requirements and left the decision to reinstate those requirements to the Secretary for Health and Human Services.
SNAP handouts were already increased by 15% just five months ago under the guise of temporary pandemic assistance and were set to expire on September 30. Those increases have now been made permanent, along with another 12% increase, for a whopping 27% rise from pre-pandemic levels, by bureaucrats rather than Congress.
A family of four will now be eligible to receive up to $835 a month in SNAP payments, even though they spent, on average, only $537 per month on food at home in 2019. Granted, food prices have increased in the last two years because of inflation, but not by 55%.
One reason for the dramatic SNAP increase is that the USDA is recommending people eat healthier foods, like fresh fruit, which tend to be more expensive. But there is evidence that increased SNAP handouts incentivize unhealthy diets—the opposite of the espoused motivation for the increase. On average, food-stamp recipients spend about one-fifth of their handout on soda, candy, and salty snacks, items which most people would consider unhealthy if not outright junk food.
The USDA is also recommending more daily calories because people now are heavier. You read that correctly—the government is prescribing more food to an overweight patient.
Augmenting SNAP handouts also adds yet another disincentive to working.
There is already a long list of government payments which have contributed to why people remain out of the labor market: normal unemployment benefits, $300-a-week supplemental unemployment in about half the states, up to $3,600-per-child tax credit, rental assistance benefits, expanded health care benefits, and extended weeks of unemployment benefits in many states.
There are also moratoriums on student loan payments and interest, foreclosures, and evictions. Some people haven’t paid their mortgages, rent, or student loans for over a year. When these expenses seemingly vanish and are replaced by gratuitous handouts, why work?
The housing-related moratoriums have set people up for failure since the full amount of unpaid rent and mortgage payments are due the day they expire. Unless a person has managed to stockpile all the missed rent or mortgage payments, that person will soon be looking for somewhere to live.
Similarly, many people with student loan debt have, over the last year and a half, become accustomed to not having student loan payments and have restructured their budgets accordingly. Repeatedly extending the student loan payment moratorium (and other moratoriums) has also created doubts as to when payments will resume. When payments finally do restart, many people will likely be unprepared to make their payments or other budget expenses.
These government handouts have contributed to the 10.1 million unfilled job openings in the country—which is 600,000 more than the total number of unemployed.
While this expansion of SNAP will add to the already gorged deficit, the greater harm is the lost economic activity in the years to come.
Because these programs disincentivize work and trap their participants in a cycle of dependency, they eliminate not only this year’s earnings, but all future earnings for those unfortunate enough to take the bait that is government assistance. That means less national income and fewer jobs filled for years to come.
The answer is simply to do the opposite.
Government assistance needs to be truncated, not augmented. There are more jobs available than people to fill them. A larger welfare state and greater reliance on government handouts are the last things America needs; self-sufficiency and work are the true paths to independence and prosperity.
Let’s call it the Salton Principle: Renaming a product may make marketing easier, but it doesn’t fundamentally change the product.
Who would buy a Salton Grill? We didn’t—and neither did you. But when it was rebranded as the George Foreman Lean Mean Fat-Reducing Grilling Machine, the little countertop grill showed up in homes (and dorm rooms) across America. It was the “hottest new product in years.”
U.S. Senate Democrats didn’t relabel their bloated something-for-every-constituency budget bill “Lean, Mean and Fat-Reducing,” but they may as well have. They now call it the “human infrastructure” plan, costing roughly $5 trillion over a decade. They also labeled their process of forcing through unrelated and unpopular items—from amnesty for illegal immigrants to elements of the Green New Deal—as “budget reconciliation,” co-opting the process and the term in ways that were never intended.
Here’s the truth: The Democrats’ human infrastructure reconciliation bill will greatly expand the role of the federal government in everyone’s lives—for generations to come—and will lead to the combination of economic stagnation and inflation we haven’t seen since the “stagflation” crisis of the 1970s.
Ultimately, American families will have less of everything—except dependence on the federal government, which is not the system of capitalism that has supported our increased freedom and prosperity.
This comes after an unimaginable spending spree so far by Congress. Even before the Senate passed the $1.2 trillion “infrastructure” bill, Congress previously authorized almost $6 trillion in new spending, allegedly due to COVID-19, and executive actions by the Trump and Biden administrations had authorized almost $1 trillion more. As a result, the federal deficit tripled to $3.1 trillion in 2020 and could be worse this year.
What’s in the reconciliation bill? While we don’t know the exact details until Democrats finish writing the text in mid-September, here’s a rough estimate based on the budget resolution that comes before it. This estimate is from the Senate Budget Committee’s ranking member:
$4.2 trillion in new spending over 10 years, but excluding budget gimmicks this amount could be north of $5 trillion.
Of that sum, $3.5 trillion is mandatory That means it likely never goes away.
$263 billion in discretionary spending.
$390 billion in increased interest on the debt (roughly the size of Israel’s the entire GDP).
National debt held by the public soars to $40 trillion (119% of GDP) by 2031.
Total debt (subject to limit) soars to $45 trillion (134% of GDP) by 2031.
There are tax hikes, of course. As the New York Post reports, “The bill would hike taxes on businesses and incomes over $400,000 while also making the state and local tax (SALT) deduction cap more generous, in effect lowering taxes for some residents of high-tax jurisdictions like New York.”
But there’s so much more in the bill.
Under the guise of “reconciliation” (which is a process that supposed to be used only for truly budget-related items), the Senate is passing a slew of new initiatives—a grab-bag of progressive priorities. Many Democrats are still pushing for an amnesty program, administered perhaps through green cards, to be part of the Reconciliation bill. And the draft resolution includes such things as “free” preschool for all 3- and 4-year-olds and two “free” years of community college for all. But, of course, nothing is free, as these expenditures will come at a high price tag to taxpayers.
There are multiple elements of the Green New Deal, as well as an expansion of Medicare, Medicaid, and Obamacare.
This vision for America is not the vision Americans have for themselves—stepped up levels of dependency on the government, higher taxes and more burdensome regulations, and less opportunity for working class families to get ahead. This is now what America is supposed to be.
Rebranding doesn’t always work, but Salton’s name change on its little grill got the attention of other appliance makers. Pretty soon, there was an Evander Holyfield Real Deal Grill (among other would-be competitors). But the George Foreman Grill has remained the undisputed champ.
The Democrats, fresh off their own success with the “infrastructure” bill in the Senate, hope for another win with the reconciliation bill. But there’s still time for fiscal sanity that works toward true infrastructure—roads and bridges—and that keeps the federal budget well below the Foundation’s Responsible American Budget.
Republicans—and any responsible Democrats who wish to join them—must work to stop the insanity before the costly repercussions of further inflation, likely stagflation, and a debt crisis put Americans in a world of hurt that no name change can cover up.
Vance Ginn, Ph.D.