Can America get its fiscal house in order?
Published 9:04 am Tuesday, September 13, 2011
Column: Al Arends, My Point of View
Have we reached the point of no return or is there an unlimited money supply? During the Reagan years, I never worried about the debt incurred by our government. It was generally held to about 3 percent of gross domestic product and our economic growth rate was above 3 percent.
Today, our U.S. debt is above 100 percent of our GDP, and we continue to have an increase of debt (about $1.5 trillion) and a shrinking economy. Couple this with debt held by state governments of $163 billion, and it appears our red ink of government spending never stops. This doesn’t include the unfunded promises to state and federal pension plans. California has an unfunded pension liability of over $500 billion. Minnesota’s unfunded pension liability isn’t nearly as bad, but it approaches $20 billion.
Email newsletter signup
Who is on the hook for all this red ink? Of course, it is the citizens of this country who pay taxes, and the disturbing factor is that the burden is falling on 49 percent of the population.
Unfortunately, history has not been kind to countries that have become world powers. In the past, great civilizations have lived an average of 200 years, and it has been especially unkind to democracies. Professor Alexander Tyler, a professor at the University of Edinborough in 1887, is often quoted as writing this (though he never actually did): “A democracy is always temporary in nature: it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority votes for the candidate who promises them the most benefits and the result is that every democracy will finally collapse over loose fiscal policy which is always followed by a dictatorship.”
Are we approaching that point of no return or is this just pessimistic ranting of a 77-year-old, who has seen many economic changes? There has always been competition between the Democrats and the Republicans, and there always will be and that is good, because it lets us make choices.
Democrats believe in big government, big spending, and they do look after the needs of the needy. Republicans believe in smaller government, less spending and are more business-oriented and believe in keeping the capital (capitalism) in the hands of the people. This does create rich people who invest and take risk. Both parties are needed (even the Tea Party) because it should provide balance and compromise.
The Democrats had control of the White House and Congress from 2008 to 2010, and they couldn’t pass a budget. President Barack Obama proposed a very large budget in 2010 creating a huge deficit and it was voted down 97-0 in the Democratic-controlled Senate. It wasn’t until 2011 that we began to understand the enormity of our debt problem and a lot of the attention to this subject is due to the Tea Party, so give them credit for that. We have just begun to address the severity of our overspending and the big question is can we create jobs while reducing the cost of government?
Our politicians need to know that our future depends on a sound economy. Every month I get a newsletter from Congressman Tim Walz on how to get government grants. They are all good programs, but can we afford them? It does get him votes. We must address subsidies to every program that receives them and see if we can reduce or eliminate them. We must reduce the cost of health care and reward those people who practice positive lifestyle living.
And, finally, we need to look at the nation’s and state’s pension system. It could be the straw that ruins our entire economy. The private sector addressed this issue and made big changes. It is time government follows their direction.
Al Arends is a member of the Freeborn County Republican Party.