Plunder and Deceit (3 page)

Furthermore, the Congressional Budget Office (CBO), an appendage of Congress, reports that without a dramatic change in federal government spending, “[t]wenty-five years from now . . . federal debt held by the public [will] exceed 100 percent of GDP. . . . [D]ebt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.” In addition, “[b]eyond the next 25 years, the pressures caused by rising budget deficits and debt would become even greater unless laws governing taxes and spending were changed. With deficits as big as the ones that CBO projects, federal debt would be growing faster than GDP, a path that would ultimately be unsustainable.” The CBO concludes: “At some point, investors would begin to doubt the government's willingness or ability to pay its debt obligations, which would require the government to pay much higher interest costs to borrow money. Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country. Even before that point was reached, the high and rising amount of federal debt that CBO projects under the extended baseline would have significant negative consequences for both the economy and the federal budget.”
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Thomas Jefferson presciently warned against such immoral collective behavior: “We believe—or we act as if we believed—that although an individual father cannot alienate the labor of his son, the aggregate body of fathers may alienate the labor of all their sons, of their posterity, in the aggregate, and oblige them to pay for all the enterprises, just or unjust, profitable or ruinous, into which our vices, our passions or our personal interests may lead us. But I trust that this proposition needs only to be looked at by an American to be seen in its true point of view, and that we shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves; and consequently within what may be deemed the period of a generation, or the life of the majority.”
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A few years later, Jefferson expressed even more trepidation: “[With the decline of society] begins, indeed, the
bellum omnium in omnia
[the war of all against all], which some philosophers observing to be so general in this world, have mistaken it for the natural, instead of the abusive state of man. And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.”
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The laws of economics, like the laws of science, are real, unlike the utopian images and empty assurances of expedient and self-aggrandizing politicians and bureaucrats. There is a point of irreversibility from which no generation and the larger society can recover. Moreover, just as economic and political liberty are intertwined, spreading economic instability leads to political turmoil and, ultimately, societal disorder or collapse. In the interim, as this process unfolds, the dissolution of constitutional republicanism—including representative and consensual governance, dispersed authority among federal branches and between the federal and state governments, and the empowerment of a pervasive federal administrative state incessantly insinuating itself into the lives of the people—becomes regular and routine. The ensuing amalgamation of governmental control, and the escalating police powers discharged to coerce and subjugate the individual through multitudinous rules, regulations, taxes, fines, and penalties, confounds and benumbs much of the citizenry. Furthermore, the designed societal transformation and decay of enlightened self-government are portrayed as compassionate, progressive, and inevitable.

Nonetheless, the federal colossus will not reform itself and self-surrender its design. Its advocates, surrogates, and beneficiaries neither admit failure nor entertain circumspection. They are increasingly fanatical as they insist on more zealous applications of their ideological preoccupations and societal schemes.

The time is urgent for the ruling generation and the rising generation—that is, parents and their progeny—to step up in defense of their joint interests and in opposition to their common foe—a government unmoored from its constitutional beginnings and spinning out of control. The statist abuses and exploits younger people and subsequent generations, expropriating the fruits of their labor and garnishing wealth yet created, as a cash cow for voracious, contemporary governmental plundering, and manipulating and constricting their prospects and liberty even before they are of age to more fully pursue and enjoy them. The ruling generation, upon sober reflection, must stir itself to action in order to untangle the web of societal and generational conflicts produced by the statists' endless and insidious social engineering and encroachment, even though it requires some level of economic self-sacrifice and partial withdrawal from governmental entitlements and subsidies.

The equally formidable struggle for younger people is first to recognize the constant and self-reinforcing influences of statist manipulation and exploitation, break loose from them, and then rally against them in their own defense. The rising generation must question, confront, and civilly resist the real authoritarianism that endangers its future and the quality of life of those not yet born, whether preached in the classroom, popularized through entertainment, or idealized by demagogic politicians. Their well-being as a free, self-sufficient, and thriving people is at stake. The real fight they must wage is against utopian statism, which grows at the expense of the civil society and their own security and happiness. Otherwise, the rising generation—and unborn, unrepresented generations that follow—will degenerate into a lost and struggling generation, living an increasingly bleak and hollow existence under steadily more centralized, managed, and repressive rule.

At the beginning of this chapter I asked: Can we simultaneously love our children but betray their generation and generations yet unborn? The answer is no. I also asked: Do younger people wish to be free and prosperous? Do they have a responsibility to preserve their own well-being and that of subsequent generations by resisting societal mutation and economic plunder? The answer to both questions is yes. It turns out that the ruling and the rising generations have much in common after all.

In the first place and in the end, we must rely on our individual and collective capacity, albeit imperfect and fallible, for sound judgment and right reason. There are eternal and unchangeable universal truths that no professor, politician, expert, or combination thereof can alter or invalidate. The mission of this book, as in my past books, is to persuade as many fellow citizens as possible, through scholarship, facts, and ideas, to avert a looming tragedy—not a Greek tragedy of the theater and mind, but a real and devastating American tragedy, the loss of the greatest republic known to mankind.

GEORGE MASON UNIVERSITY ECONOMICS
professor Dr. Walter Williams rightly describes the underlying pathology driving the nation to economic and financial ruin as a moral problem: “We've become an immoral people demanding that Congress forcibly use one American to serve the purposes of another. Deficits and runaway national debt are merely symptoms of that real problem.”
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As Williams states, nearly 75 percent of today's federal spending “can be described as Congress taking the earnings of one American to give to another through thousands of handout programs, such as farm subsidies, business bailouts and welfare.”
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Dr. Thomas Sowell, senior fellow at the Hoover Institute, Stanford University, notes that “There was a time when the purpose of taxes was to pay the inevitable costs of government. To the political left, however, taxes have long been seen as a way to redistribute income and finance other social experiments based on liberal ideology.”
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The consequences for the rising generation and future generations of the statists' immoral, politically expedient, and economically ruinous behavior and policies are unambiguous as evidenced by statistic after statistic, which are mainly ignored, discounted, or excused by most of the media, academia, and, of course, governing statists. Nonetheless, there is no mistaking the eventual societal turmoil these facts and figures portend—evidence all Americans, and especially younger people, must heed.

The nation's fiscal operating debt was already $10.6 trillion on the day President Barack Obama took office in January 2009. By the end of January 2012, however, the fiscal operating debt had increased 44.5 percent to $15.4 trillion. As of April 12, 2015, the fiscal operating debt was $18.152 trillion—a 71 percent increase in less than six and one half years.
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Each man, woman, and child in this country's share of the national debt has grown from $33,220 at the beginning of the Obama presidency to more than $56,900 today.
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To be sure, the debt habit began long before the Obama presidency, but it is now a full-blown addiction.

During the Obama administration, government spending and borrowing have both sky-rocketed. The financial bailouts and expanded social spending during the prior administration of George W. Bush contributed mightily to the federal government's debt. In fact, Bush is second only to Obama in the amount of debt in absolute dollars with which he burdened younger people and future generations.
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But with the addition of the massive Patient Protection and Affordable Care Act program, or Obamacare, and other profligate spending programs, including some $800 billion for the American Recovery and Reinvestment Act of 2009, or “stimulus program,” there is no denying that the past several years have created historic records for yearly deficits and overall debt.
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As C. Eugene Steuerle of the Urban Institute explained: “Over decades, we have wound [a] straight jacket policy around ourselves. Especially in retirement, health and taxation—budget areas where now-dead or retired members of Congress inscribed permanent policies—annual decision-making and regular review have been choked off and future generations saddled with the tab or forced to raise the resources to meet these past promises.”
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In July 2014, the nonpartisan Congressional Budget Office (CBO) released its annual Long-Term Budget Outlook. The document provides an extensive analysis of projected government spending, debt, and obligations. It reported that between 2009 and 2012, the federal government amassed the largest budget deficits relative to the size of the economy, the Gross Domestic Product (GDP), since World War II.
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These deficit levels were almost twice the percentage of the deficit at the end of 2008.
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Measured in dollars, the federal deficit in 2008 was nearly half a trillion dollars.
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By 2012, the deficit was $1.4 trillion.
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In 2014 alone the federal budget deficit was larger than the combined market capitalization of Apple Computers, Exxon Mobil Corporation, and Microsoft—three of the world's largest corporations.
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Economists discuss the budget deficit in terms of its percentage of GDP. For most of the forty-plus years before 1998, federal debt held by the public was on average 39 percent of GDP.
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But when the unprecedented deficits that began at the end of the Bush administration exploded at the beginning of the Obama administration, and swelled further during the course of the Obama administration, the total amount of federal debt held by the public in 2014 rose to nearly 74 percent of GDP. Assuming that current laws remain in place—including the so-called Budget Control Act—federal debt will reach 103 percent of GDP by 2039.
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CBO's long-term projections do not incorporate the negative economic impacts that are projected to accompany the government's debt burden. When the economic impact is calculated, it is estimated that the debt burden will reach 111 percent of GDP by 2039.
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“Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.”
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Increased public debt also means increased debt-servicing costs, particularly when the Federal Reserve eventually discontinues its artificially low interest rate policy. “When the Fed starts to raise interest rates, rising interest expenses to the Treasury is going to exacerbate the climb in the deficit,” according to economist Michael Englund of Action Economics LLC.
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The increase in interest payments by the federal government will consume a still larger portion of the federal budget, thus increasing the gap between remaining revenues and government benefits and programs.
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Interest payments are expected to more than double relative to the size of the economy—from 2 percent to 4.5 percent of GDP.
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Ever increasing federal spending exacerbates the national debt problem. For most of the past forty years federal spending has averaged 20.5 percent of GDP.
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But in Obama's first year in office, federal spending spiked to 24.4 percent of GDP—the highest level since World War II.
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In both 2010 and 2011, expenditures were 23.4 percent of GDP.
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Even with sequestration cuts and follow-on budget deals, spending was 22 percent of GDP in 2012 and nearly 21 percent of GDP in 2013.
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CBO projects spending levels to increase to 26 percent of GDP by 2039.
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This is an immense increase in federal spending. It is attributable to two primary components: federal entitlement spending and debt financing. They are said to be “permanent” fixtures in the budget, which means both are supposedly beyond the reach of Congress's annual budget process.
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Social Security and the federal government's health-care programs—Medicare, Medicaid, Children's Health Insurance Program, and subsidies related to Obamacare—will double in relative costs over the next several decades. For the past forty years they have together consumed on average 7 percent of GDP. However, they are expected to increase to 14 percent of GDP by 2039.
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Social Security, Medicare, and Medicaid account for 60 percent of the government's noninterest expenditures in recent years, steadily growing as a share of annual federal expenditures.
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For example, in 1970 social programs accounted for 32 percent of total federal expenditures.
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Social programs grew to 44 percent of federal expenditures in 1980 and 1990, and 54 percent in 2000. They were promoted as safety-net programs for the protection of the poor, elderly, and vulnerable. But in each case the programs have snowballed and have become unsustainable. CBO expects their spending percentages to continue increasing indefinitely.
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Although this topic will be addressed more fully in a subsequent chapter, suffice it to say that the Social Security benefit cost explosion has been predicted for decades.
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There are currently 58 million people receiving Social Security benefits. By 2024 that number will grow to about 77 million, and by 2039 there will be 103 million eligible beneficiaries. Average benefits are on the rise as is the number of people qualified to receive benefits. Over the next ten years there will be a 38 percent increase in the number of people over sixty-five years of age and entitled to receive Social Security benefits.
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By 2039, CBO reports, there will be an 82 percent increase in the number of those who are over sixty-five years of age.