03 Mar Gutless Congress’ Money Mess
We have a problem here in the good old United States of America: We are broke. No, not all of “us” as individuals, but all of “U.S.” as a nation. Our federal government is broke and getting broker every day.
Am I the only one who thinks this is a problem? Am I the only one with parents who never borrowed money to buy anything? Am I the only one whose spouse used to be a Certified Public Accountant? Of course I’m not.
Congress is the cause of the problem. Nobody in Congress has the courage to tell the truth to the voting public about our nation’s broke-ness. Few Republicans will stand up to President Trump when he wants to spend more money while giving tax breaks. Even fewer Democrats would stand up to their leaders who wanted the same. And none of them will say “no” to special interests.
Not to put too fine of a point on it, but I call that gutless, and we are stuck in a mess.
It’s Not That Complicated
The messy morass is made up of three ugly substances. The first is debt; the United States owes more than $36 trillion dollars, with that number projected to hit $50 trillion in ten years. The second is our unbalanced budget; America this year will spend $7 trillion dollars and bring in $5 trillion, a disparity that is going to get much worse, soon. The third substance is selfishness.
Let’s unpile the mess here, starting with the national debt. The problem with debt, generally, is that you have to pay it back. On top of that, lenders charge interest. And, if you borrow more money to pay your interest, you owe more principal and will incur more interest. Such a downward financial spiral results in not having money left for the things you need. None of this is all that complicated.
America’s current national debt limit is $36.1 trillion, which – not coincidentally – is the exact amount we owe today. Since we reached that constraint in January, the Administration has been using a bag of tricks to stay afloat. Extended funding runs out on March 14, with a “government shutdown” to follow.
When in such a financial quagmire, the only way out is to spend less than you bring in. Make a balanced budget and stick to it. Brilliant! But Congress is responsible for our nation’s finances, especially the budget, taxes, and spending. Congressional involvement tends to take the shine off most brilliant ideas.
As I write this, Congress is working on the budget for the coming year. Republicans in the U.S. House of Representatives have proposed extending 2017 tax cuts that will cost the federal government more than $4 trillion in lost revenue over the next decade. These cuts during Donald Trump’s first term reduced the top individual income tax rate from 39.6 percent to 37 percent and provided a bigger standard deduction, a larger child tax credit, and business tax breaks, among other benefits to taxpayers – particularly wealthy ones.
President Trump has promised to eliminate even more taxes (such as on tips, Social Security income, and overtime) than even the House is suggesting. At Mr. Trump’s request, the House and Senate also are proposing increased spending on things like border enforcement, energy, and the military, although the House is attempting to cap future Medicaid spending increases.
The net result likely will be a higher national debt limit (which constraint the President wants Congress to remove entirely) and a 2025-26 budget that substantially enlarges our debt.
True, President D’Elonald Trumusk and his Dept. Of Govt. Eff. are working to reduce some government spending. Most recently, DOGE has asked federal agencies to submit plans by March 13 to significantly reduce their staffing and to consolidate programs. (Law enforcement, national security, public safety, military, and postal jobs are exempted.) Management reorganization plans are due April 14, and federal departments have until September 30 to implement the reduction in force and all structural changes.
These relatively minor steps may help, but a major difficulty is that only “discretionary spending” can be controlled in the annual budgets, and nearly half of that is for national defense. Even if all discretionary spending, including the military, were removed – meaning all employees and expenses of all departments were eliminated – we still would have an unbalanced budget. That is because interest on the existing national debt is $1 trillion per year, and entitlement spending on Social Security, Medicare, Medicaid, employee pensions, etc. exceeds $4 trillion, while projected revenue is less than $5 trillion.
Courage Needed
“When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear.” I assume this quotation from Thomas Sowell was about politicians. Members of Congress, in particular, are prone to put their self-interest in re-election and fundraising ahead of truth telling and even American survival.
And, if they were not selfishly thinking about their own well being, what our congressional representatives should tell us today is that we have only two choices, neither of which we want to hear. We must raise taxes or reduce spending (particularly by making future recipients not quite so “entitled” to future entitlements). Moreover, failure to do these things will have not only economic consequences, but severe national security risks as our country will be even more indebted than we are now.
Medicare, Social Security, and Medicaid (along with interest payments and funding our military) comprise the bulk of federal expenditures. These entitlements were designed for a country with higher birthrates and lower life expectancies. Today, we no longer can afford to start paying benefits at the ages we do now, and we must make wage earners contribute above the current income caps. This is not “eliminating” or even “cutting” anyone’s existing benefits. Only Congress has the power to make these program eligibility and contribution adjustments.
Until we are extracted from our current mess, Congress also needs to find ways to increase tax revenues across the spectrum of tax payers, both corporations and individuals.
If Congress had guts, it would tell these truths and start to fix this mess.
Written by Quentin R. Wittrock, founder of Principle Based Politics.
Look for his posts, as this blog will explore and promote the idea of principle in politics, both as to individual elected leaders and our federal government as an institution.
Principle Based Politics does not endorse or support any particular political candidate or party.
James Loerts
Posted at 13:31h, 04 MarchYes indeed. The problem we have is Republicans say Democrats will not compromise on entitlements. Which is true. And Democrats say Republicans will not compromise on taxes. Which is also true. So instead of both sides acting like grown-ups they ignore the problem and keep adding to the debt. It would be wise to not hold your breath waiting for Congress to take action.
Quentin
Posted at 13:35h, 04 MarchIn addition to “ignoring” the problems, both sides almost seem to “preserve” them so they have something for which to bash their opponents.
Trudy Johnson
Posted at 15:23h, 04 MarchWarren wants to pay more in TAXES so let him! (Along with Musk, Bezos – all of them!) Small start.
Gary Russell
Posted at 15:28h, 04 MarchQuentin – right on. Because the country has grown in population and there are so many aging into the social security/Medicare years, Congress needs to confront that reality and adjust fiscally. Coupled with people living longer (apart from the COVID years), that probably means sliding the social security age up over time. Many Libertarians proposed sensible ways to do this in the 1990s.
Saying social security and Medicare are “off limits” won’t work anymore and, dare we say it, that means defense spending also. To have a balanced budget and bring down the debt will require looking at ALL areas which includes tax revenue and DOGE cuts as well.
I agree with you that these adjustments won’t be popular but let’s give the American people a little credit. They won’t like it, but they will understand if the cuts are applied fairly. Oh, and maybe refrain from dancing around with a chain saw and project a little empathy for those impacted.
R Fredin
Posted at 16:35h, 04 MarchGREAT topic! Hard to get this through people’s brains but for each of us, the more money you have, the more you spend. Taxes on products, sales, payroll, income, gas, death, etc……. These ALL should be lower and in return leaves more money for the “taxpayer” to in turn buy more! Which continues the cycle of more money to the government in the above listed taxes. We have experimented with the “shut down” of the economy and was the worst financial disaster to the U.S. economy in 90 years. As a Minnesota business owner since 1997, the more money I can give my employees, the more they spend. The problem is, that we business owners can only give what we have. It is a good thing for ALL of us to have lower taxes. And as far as DOGE goes, at least we are taking a look at the potential fraud and waste and showing it to the people who PAY the taxes. And if you’re on the side of “tax the Billionaire republicans”we could do that to the 2 of them, but the rest of the billionaires are all Democrats……. Great subject Quentin. Thank you for your time.
Russ Weaver
Posted at 17:08h, 04 MarchWe obviously will not have a solution to the current fiscal mess any time soon. It seems to me many Republicans (not just MAGA “Republicans) are deathly afraid of Trump and his retribution policy. Until Trump crashes and burns, I see no light at the end of the tunnel.
Bill Zucco
Posted at 21:01h, 04 MarchIn the 1950’s, the tax rate for the highest bracket was around 90%. As taxes went lower, the wealth gap widen as well as the national debt. There has never been the trickle down, as promised, to the middle and lower income classes. It is embarrassing to have minimum hourly wage under $8. If the tax rate had stayed in place, no national debt, a federal supported health care, and reasonable costs for education. Instead, Citizens United allowed the low taxed wealthy to instead use their excess wealth to buy politicians to insure keeping their wealth to the detriment of the vast majority of the American citizens.
Darren Knight
Posted at 21:12h, 04 MarchGovernment is an insatiable beast—it only grows—it does not shrink without a concerted and coordinated effort by both political parties. Ever getting bigger government is like a replicating microorganism—and it is dangerous. These are not anti-government or ant-tax statements. Obviously, we need proper limited government that provides our society fair and reasonable oversight. However, the dems and republicans have never been able to get together to control government. Congress is filled with immature adolescents that lack good faith when it comes to their political opponents. The deficit is way too big to tackle with tax increases, which will only limit or reduce economic growth. We need to grow our way out of this giant mess—and finally put a choke chain on the government—at all levels. The Great Depression was not overcome by FDR’s New Deal—it was the economic growth required to fight WWII that ended the Great Depression. Similarly, and tragically, it was not government controls or increased taxation that boosted Germany out of its economic crater prior to WWII—it was the war effort in Germany. To be crystal clear—so you all don’t get mad at me—I am not suggesting we need a giant conflict to fix our deficit problem. (I’m with Orange Man on stopping the current wars.) These are simply illustrations—drastic examples–that point to growth as the answer. Entitlements should definitely be addressed, with changes needed to make these programs sustainable. But at the end of the day, we need a much smaller and more efficient government and big increases in GDP—without inflation—to get rid of the deficit. The problem is too big to address without major changes. We may not be up to the challenge. I fear that Congress will need to be dragged along by the executive branch—and it may take a few consecutive presidents with the right mindset to get somewhere.