Budget Deficits & Ignorance Surpluses: A Clinic in Governmental Incompetence

Over a year ago, in April of 2022, I wrote an article about the necessity of compromise in American government. Rather, I wrote an article airing out my frustrations over a lack of said compromise in American government. Those concerns have not been alleviated by the Biden administration; rather, both parties continue to display a continual inability to play nice, except for when the stability of the global economy hinges on it.

If you want proof that compromise occurs only under the most extreme circumstances, look no further than the debt crisis. Facing yet another borrowing limit and impending June 5th deadline, at which time the United States government would no longer be able to borrow and would be forced to default on its debt, Biden and the McCarthy-led Republicans (if you can call McCarthy the "leader" of a group that seems so intent on blackmailing him into pursuing their agenda) reached a compromise. The deal doesn't raise the borrowing cap, currently at $31.4 trillion (!!!!!); the limit is suspended until 2025 to remove it from debate in the upcoming election cycle, and to allow the US debt to grow beyond the cap.

Republicans tried to use the necessity of the deal to pressure Biden into rolling back some of his programs, including student loan forgiveness and pieces of the Inflation Reduction Act, according to Politico. Instead, they got some moderate defense spending increases, tightened welfare restrictions, capped non-defense spending, and clawed back Covid aid money and IRS expansion spending.

So, in summary: neither side gets exactly what they want, and the borrowing limit vanishes from the minds of Americans until 2025, at which time we get to freak out about what defaulting on the national debt could mean for the country and the world (again!). Are you having fun with debt crises yet? Didn't think so.

How did we get here? The short answer: the government has no idea what it's doing.

Here's the long answer.

Republicans and Democrats alike seem content to pretend that the national debt doesn't matter, that the US can just keep raising or suspending the debt limit indefinitely without any consequences. Democrats are willing to spend until the printers break; Republicans like to pretend that they care about spending until they get the chance to spend more money on the military, at which point they break the bank (and the printers). The GOP was once the party of responsible government spending, and yet the last president to leave office with a budget surplus was Bill Clinton in 2001. Bill Clinton the Democrat. The president who started excessive deficit spending? Ronald Reagan, way back in 1981. Ronald Reagan the Republican. According to the A-Mark Foundation, the four Republican presidents since Reagan (Reagan, H.W. Bush, W. Bush, and Trump) all increased the deficit; the two Democratic presidents (Clinton, Obama) decreased the deficit (to be clear, that means they changed the amount that the government borrowed; only Clinton maintained a budget surplus).

(Side note: Calvin Coolidge left office with a budget surplus. Further evidence that Coolidge is the greatest president in American history. Just so you know).

If that pattern seems odd, you're not alone: Republican administrations are supposed to be the fiscally responsible ones. The Clinton and Obama administrations (especially the latter) all had plenty of flaws, but it's difficult to point to the Republican administrations as significantly more responsible spenders, as much as they'd like you to think that. The fact of the matter is that both parties are entirely willing to spend with reckless abandon; I would theorize that the only reason the Democrats ever lowered the deficit is because they weren't willing to spend on the military to the same degree as the GOP. Both parties want to get things done to maintain the support of the people; both parties recognize that most of the people don't care about the debt as long as it stays out of the news and out of their households. Thus, both parties remain entirely unwilling to call the debt what it is: an embarrassing reminder of the government's superlative ability to allocate, spend, and distribute funds irresponsibly, conveniently fashioned into the shape of a cartoonishly-large piano suspended by a string above the Capitol building (or, rather, over the taxpayers who will inevitably bear the brunt of the weight).

So, what exactly are the consequences? To be honest, I'm not entirely sure. My knowledge of economics is limited. What I do know, however, is that debts are never positive. Nobody likes owing anybody anything. Student loan forgiveness is a hot topic for a reason. The US government owes 69% of its money to the public through various agencies and 31% to foreign entities. The public can't do much of anything; foreign entities, however, pose more of a threat. As of 2017, 13.9% of the debt was owed to China, the most prevalent foreign threat to the US (data via seekingalpha.com). The US has become shockingly comfortable with being indebted to a foreign superpower with opposing interests and anti-American sentiments, not to mention the human rights violations and moral/ethical red flags.

The American people should not be comfortable with the current state of the national debt, just as they are uncomfortable with insecure borders and climate change and the many other issues that frequent the front page of the news. And yet the debt crisis remains in the background, making the news only as often as the US government inevitably nears a major economic catastrophe.

The only way to force the government to listen to the people is to leverage the only thing they care about: elections. If the American people want the government to view the debt as the albatross that it is, rather than an unfortunate-yet-unimportant reality, the people should vote and petition accordingly. Of course, there's no guarantee that any of the candidates will ever make budget cuts a major plank of their platform again, but they certainly won't address it if the American people don't push for it. If you're passionate about political issues of any kind, about immigration and the wealth gap and welfare spending, I would challenge you to hold the government accountable for the core flaw that influences all three of those issues: poor spending habits.

Maybe every member of Congress should be required to read a financial self-help book before taking office. Would that require a Constitutional amendment? Regardless, hopefully you enjoyed the article! Music stuff coming soon.

Emory

(Image cred: consumersadvisory.com)