America's Fiscal Crisis

Note: The following is based off of a blog entry I had written for a blog I have but have hardly kept active, a column I wrote, an article I wrote for my school newspaper, and the speech I've been giving for Speech and Debate.

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The United States of America is at a breaking point. What we are in the midst of now is America’s fiscal, or financial, crisis, and it is the result of continuous government policies over the last 35 years, culminating under the current President of the United States, a man supposedly of the party of less spending and limited government—the Republican party. While claiming to be a conservative, President George W. Bush is, in fact, a fiscal socialist, instituting policies that have driven the United States to the breaking point.

The definition for the term "fiscal socialism" relies upon the individual words. The word “fiscal” denotes support for cutting taxes in order to stimulate the economy and thereby increase tax revenues to the government. The word “socialism” in this case refers not to the economic system of socialism itself, but to massive government spending and the huge expansion of government. A fiscal socialist is one who believes in or acts upon this ideology.

From the ashes of the failed fiscal socialist policies of the Bush administration, America’s financial crisis has arisen—a crisis that yields tremendous implications for the future. President Bush is now advocating stricter control of the government's funds, but the fact is that it is too little too late.

Since 2001, the Bush Administration has grown the federal debt by a whopping 61%, a shocking $3.5 trillion increase from an already frightening $5.7 trillion debt to a disgustingly high $9.2 trillion. According to economist Stephen Slivinski, director of budget studies at the Cato Institute, in a 2006 Denver Post article, “In Bush’s presidency so far the federal budget has grown by 27% after adjusting for inflation. That’s more than twice as fast as during the eight years of President Clinton.”

According to the same article, even when entitlement, defense and homeland security spending are omitted, the growth of federal spending under Bush surpasses that of all previous presidents by wide margins. The growth of federal spending under President Jimmy Carter was 1.6%, under Bill Clinton it was 2.1% and under Lyndon Banes Johnson it was 4.1%. The current so-called “conservative” Republican president’s rate of growth stands at 4.5%.

To his credit, upon taking office, President Bush saw fit to cut taxes. It is my belief that this was a wise decision because, as proven under the Reagan administration, tax cuts stimulate economic growth and increase government revenues. However, with tax cuts must come moderate spending, as the revenue increases tax cuts provide do not necessarily outpace government expenditures. This is why the fiscal socialist policies of the Bush administration inevitably fail.

Case in point: with his 2003 Medicare legislation, President Bush and Congress instituted additions which blew that program up to a size of unprecedented proportions, increasing Medicare costs by as much as $1.2 trillion in 10 years. And his adjustments were adjustments for the drug companies, not the people. Poll after poll showed America’s seniors did not want the particular additions to the program this legislation provided.6 In essence, the president and Congress chose to expand a government program without the support of those that would be affected by the law, which makes it all the worse. As the baby boomer generation enters into the forefront of Social Security and Medicare, the government’s obligations will be stretched even further, costing even more money.

The point is that, over the last seven years, our elected officials have driven us into the biggest debt in US history. While I personally prefer tax cuts to tax hikes, when it comes to the debt, I don't particularly care what your tax policy is. High taxes, low taxes, it doesn't matter. Regardless of that fact, you have to live within your means. The fiscal socialist policies of the Bush administration are not working for the very reason that we are not living within our means.

The ball will now be in our generation’s court. Because the Bush Administration has squandered a surplus, spent like a drunken sailor (with all due respect to sailors, of course), and expanded government, our generation will be forced to grapple with the debt that has resulted from his fiscal socialist policies. Being beholden to creditors is never a good thing when you’re an individual with a family to provide for. Now imagine being a nation which has 300 million people to provide for.

We are presented with a conundrum with China, one of our biggest creditors, for instance, as children’s toys of all things are coming into this country doused in toxic chemicals, spurring government recalls. So why doesn't the US government just say to China, “Keep your contaminated communist crap the hell out of our country?” It's because, as it stands, we owe that nation $400 billion.7 This situation is dangerous, and our generation is literally going to pay the price.

Recently, in the words of Blues master Buddy Guy, “the dollar done fell.”8 The value of the dollar has decreased substantially, causing various nations to rethink their holdings of our debt. If investors worry about the value of the dollar in the future, they will demand that the interest rate on our bonds be heightened to offset the risk they’re assuming. What that means is, as the value of the dollar goes down, we may have to pay more on the interest on the debt each year, giving us even more problems to grapple with in the future.

Now let me put it this way. The United States is $9.2 trillion in the hole. In order for us to pay that off, you owe $30,000. You owe $30,000. You owe $30,000. Every man, woman, and child in this country owes $30,000 if we are to dig ourselves out before it’s too late.

It is imperative that the government control its spending now. The tax cuts aren’t the problem—they've actually increased revenues. The real problem is the spending. Entitlement programs like Medicare need to be reworked and switched over to means-tested structures where individuals have to qualify in order to receive benefits. Social security needs to be privatized for those currently under the age of 55.

Wasteful pork barrel spending must be eliminated. Discretionary spending must be either frozen for a certain amount of time or operate under a limited budget. Useless federal programs need to be eradicated, department budgets cut. Only then, can we see a glimmer of hope for the debt—and our generation—without damaging the economy with tax increases.

We elected a man to the office of the President of the United States under the impression that he govern as a “compassionate conservative.” Well what’s compassionate about leaving our generation with the fiscal crisis we’re now in? What’s conservative about spending without end and increasing the scope of government? The answer is nothing. And now we are going to be left to clean up after the mess of the previous generation.

James Freeman Clarke once said, “A politician thinks of the next election; a statesman, the next generation.”

The United States of America is in desperate need of a statesman.

Note: I will soon post a blog entry elaborating upon more specifics regarding what I believe needs to be done to solve this crisis.