It’s Groundhog Day in Washington, D.C., again. Any time there’s talk of reducing spending, the hysteria over how apocalyptic the consequences will be kicks in when politicians are on camera.
Words can’t describe how pathetic and disappointing it is to watch Washington panicking over pennies. We’ve been running trillion dollar deficits for four consecutive years now (despite record high revenues). We’re at a record $16.5 trillion public debt and when something that will reduce spending by less than 3% of the federal budget this year causes politicians to act like we’re on the eve of the second coming, it makes you wonder if any genuine spending reform is even a possibility anymore or if it’s just a pipe dream of the past.
It’s insane. It’s disgusting. It’s like watching two gluttons argue over whether they should pick the olives off of a meat lover’s pizza? Are you kidding!?
According to the non-partisan CBO, the federal government will spend $47.2 trillion over the next 10 years – with spending projected to rise every year for every program. If this sequester kicks in on March 1, it will reduce that number to … drum roll … $46.1 trillion over 10 years.
This is how sick it’s getting in Washington. But it didn’t used to be this way.
In the 1990s, President Bill Clinton raised tax rates on all Americans, hiking the top bracket from 28% to 39.6%. But as you can see on the chart below, Clinton and the Republican-majority Congress were also able to slash spending from 23% of GDP down to 18%, on par with the historical rate of revenues as a percentage of GDP. That marked the first significant reduction of spending in decades and, coincidentally, helped balance the budget for the first time in 30 years – following up on a promise to deliver a government “that lives within its means.”
Guess what? That reduction in spending led to the biggest reduction in public debt as a percentage of GDP we saw in decades.
Did the world end? Did the entire economy collapse? Did we all wake up the next day and find ourselves killing each other for food supplies and limited resources a la The Road Warrior?
No. Quite the opposite, economic prosperity was high, unemployment was low and the private sector was in full speed and at full strength.
As you can see in both charts, federal spending skyrocketed once the Democrats took over both the White House and Congress, leading to record high debt in the shortest amount of time. And what did we get for it? A national debt eclipsing our entire GDP, a stubbornly high unemployment rate (up to 7.9%), record low number of working age people (18-64) in the workforce (63.6%), record high welfare recipients from Medicaid (70.4 million) to food stamps (47.7 million) to disability claims (8.8 million), weak economic growth (with a contraction in Q4 of 2012), weak consumer spending, rising consumer costs, lower household net worth and a credit rating downgrade.
This is what we’re so worried about protecting through sky high federal spending levels so sensitive that even a fraction of a reduction could break all this apart? I say break away.
But the cowards in Washington are so spineless and dysfunctional that instead of welcoming this sequester as an opportunity to overhaul waste and inefficiencies in every department from the top down, they’re scrambling to blame each other and win the public relations battle.
This is so pathetic.
We’re only in this situation in the first place because their brilliant “super committee” failed to come up with a detailed plan to surgically cut $1.2 trillion worth of spending over 10 years. So instead it will just be a broad reduction across the board – and Washington has no one to blame but themselves.
Including President Obama, who spent the last four years doing nothing but campaigning and is still acting like he’s on the campaign trail instead of leading solutions. While he uses buzzwords when giving speeches like “balanced approach” and “compromise” and claims phantom “spending cuts” through budget gimmicks that every credible expert has dismissed, behind closed doors he’s demanding a blank check: more spending, more stimulus (or “investment” as he likes to call it now), and an infinite debt ceiling.
The federal government spends an average $10.4 billion a day, $433.3 million an hour, and $7.2 million per minute. That adds up to about $3.8 trillion a year. Last year we brought in a record $2.5 trillion in taxes (an all-time high, mind you) which still leaves a deficit of $1.3 trillion from our out of control spending levels – or about 4 months and 1 week’s worth of spending.
Let me repeat that – even with income tax rates at a near historic low last year, revenues have never been higher. So are our record high deficits and debt really a problem of revenues or a problem of spending?
But according to Obama, “We don’t have a spending problem … I’m getting tired of hearing you say that.” Despite restoring top tax levels back to the Clinton era (which brings in a whopping extra $62 billion a year in revenue – or less than a week’s worth of the deficit), he and other Democrats have made their intentions clear that they’re more concerned with raising taxes even higher instead of tackling spending reform.
At least Clinton coupled his tax hikes with meaningful spending reform. Obama isn’t interested in following his example whatsoever.
Meanwhile, other politicians are doing whatever they can to save face over this sequester, as they do with anything in Washington. But the sad thing is one has to wonder if meaningful spending reform can ever be a reality again some day. If Washington can’t even do this sequester right, then citizens all across America will lose faith that the glutton can save himself from the inevitable Greek-style massive heart attack coming.