By Matt Vigeant, staff editor Plato’s Anthropological Principle says that society is simply man at large. If this is true, our spend-aholic government is a person who makes $50,000 a year, but foolishly decides to take a subprime mortgage on a million dollar house. But, unlike the subprime man who cannot pass his debt on to his children, the government can – and seems poised to again – pass its debt on to the next generation.*
Both the Republican House and President Obama have come out with their respective budgets, and while both propose cuts to current spending, neither actually reduces our national debt. Take the President’s budget first. Obama’s budget aims to trim deficit spending by $1.1 trillion over the next decade, which means that the federal government will still run $7.4 trillion in deficits through 2021. This deficit reduction all depends on raising corporate tax rates, raising income tax rates on the wealthy, and assuming 4.4% and 4.3% economic growth in 2013 and 2014. While reducing federal deficits garners positive media attention, these deficit “reductions” actually increase the national debt. Under the President’s budget, the debt will grow from $14 trillion now to $26 trillion by 2021 according to Republican estimates, or $19 trillion by the Obama administration’s calculations. In 2021, the debt will be 77% of US GDP. Compare this to the EU, where the maximum amount of debt to GDP that a state is allowed to have is 60%.
On the right, House Republicans are proposing deeper cuts in discretionary and defense spending, but they also do nothing to combat the debt. So the party that is claiming to be financially sound is as guilty as the President in kicking the debt can down the road to the next generation.
So what exactly is causing these huge deficits and debt? It’s entitlements -Social Security, Medicare, Medicaid - and defense, which make up the majority of our budget. While Republicans decided to make cuts to the defense budget in their proposal, neither side is touching the bigger issue, Social Security and Medicare/Medicaid, which takes up 60% of President Obama’s 2012 budget.
Entitlements are called the third rail of politics because lawmakers know that they’ll probably lose their seats if they vote to cut entitlements. So if the biggest part of our budget can’t be touched, there’s only one option – raise taxes. But raising taxes will stifle economic growth, and also jeopardize re-election chances for politicians. So how can we solve a problem that no one in Washington who likes their job is willing to tackle?
Perhaps the answer to all of this is term limits. While term limits have inherent problems, they have one large upside – someone who knows that they are not running again can make the right decision for America, not their re-election hopes. A case study on this is the 1994 Republican Revolution, where those who came in with voluntary term limits helped balance the budget before leaving office, while those who stuck around helped create huge deficits. If touching entitlements is political suicide, maybe we need someone on their political death bed to create that missing change we can really believe in.