In these weekly commentaries I try to stay pretty even-keeled but the whole “fiscal cliff” mess has driven me over the edge. The nation – the American people – are $16 trillion in debt – $16 trillion with no hope for reductions on the horizon. And, just so we’re clear, what Congress and President Obama just agreed to only makes matters worse.
But before I hit the roof, let’s keep budgets and debt in perspective. When we anger over such things it’s easy to forget that balanced budgets and zero debt really never have been the standard. Since 1791, when we first started keeping track of national debt, officially, the United States was in debt to foreign powers to the tune of $1.8 billion (in current dollars). In other words, the U.S. always has run a debt to one degree or another. Of course, periods of war (and there have been many since our founding) increase the debt most dramatically. But I should note that the decision in the 1960s to create the modern welfare state has taken this country to new levels of debt.
Budget surpluses are also rare at the federal level. From 1940 to 2013, a 73-year period, our federal government ran a budget surplus only 12 times. Out of six dozen years, Congress ran a budget surplus only a dozen times.
And I should add that while I support a constitutional amendment requiring balanced budgets, we need to be clear that politicians who want to spend your money will always find a way around any limitation to do so – always. The only true check and balance against deficit spending and runaway national debt is the vote of the people. We’re the ones who put these politicians in office and we’re the ones who can replace them until we get the kinds of leaders we need.
The politics inside Congress has been so corrupted by power, and the “spending bias” is so compelling, that even the most ardent supporters of limited government have an extremely difficult time not becoming part of the problem. The very few who do manage to stand their ground are pariahs, kooks and irrelevant because they tend to overcompensate against the system and miss the mark of prudent limited government.
So this brings us to the fiscal cliff. It’s important to keep in mind that Congress and President Obama created the budgetary deadlines that led to the fiscal cliff. There is no foreign power demanding that the United States government get its house in order. There are no external forces outside of Congress and President Obama pushing us off any imagined cliff – meaning there is no cliff. All of this cliff-talk was pre-election posturing just to get re-elected. Now that the election is over, the crisis magically dissipated. The recent budget votes in the Senate and House in support of the announced deal is nothing more than it always has been – a vote for ever-bigger spending. Things did change, just for the worse.
In the past 30 years there have been two other occasions when a sitting president was willing to raise taxes, once in 1982 under Reagan and again in 1990 under the first President Bush (remember “Read my lips, no new taxes”?) and now, again, in 2013. The difference between these three budget deals is that the first two swapped $3 in spending cuts for $1 in new taxes and $2 in spending cuts for $1 in new taxes, respectively, while the Obama deal swaps $41 in taxes for $1 in spending cuts. Yeah, you heard me correctly – $41 in higher taxes for $1 in spending cuts. And that’s what we now call success.