PREVIEW: Intergenerational Theft

The Federal government spending is clearly out of control. The annual budget deficit runs about $1.0 trillion in 2022 for fiscal year 2022 or 3.9% of GDP. During the past six years, the debt has risen from $21 trillion to $31 trillion. About half of it is due to COVID-19 and the rest due to general new entitlement programs, such as the Green New Deal.

During this time, the nation’s debt has risen from 75% of the GDP to 125%. Excluding the short-term challenges that COVID presented, what is causing this explosion of federal spending? What should we do about it? What are the longer-term ramifications?

We have identified eleven structural problems feeding these catastrophic fiscal abuses:

1) Democracies are inherently poor financial stewards. As political parties vie for votes and power, they offer growing subsidies to the voters. Therefore, most democracies lack solid internal financial management and oversight.

2) Democracies, unlike corporations, do not use Generally Accepted Accounting Principles (GAAP). As a result, long-term liabilities are not adequately accounted for until the pay-as-you-go bills come due 10-20 years later.

3) Rising interest rates on more than $31 trillion of debt are not budgeted correctly, thus increasing future budgets by $300 billion for each 1% rise in interest rates. Such high levels of debt will become a huge burden to our children, grandchildren, and great grandchildren, who will get stuck paying the bills. Great grandchildren are particularly easy to tax, because they either do not yet exist, or they do not yet vote.

4) Military spending for 2023, of nearly $780 billion, is short by at least $100 billion. That shortfall includes the necessary funds to cover the development of hypersonic weapons, nuclear weapon modernization, and naval and space-force expansion, to match or exceed that of the Chinese. In addition, there is a need to increase our Middle Eastern military buildup, in order to quell inflated Iranian ambitions. We must also increase military pay  and fully fund military recruitment.

5) Social security and Medicare for 70 million seniors and disabled citizens represent 65% of federal spending but are grossly underfunded. Each is projected to go bankrupt in 10-15 years. The recently announced 8.7% increase in social security benefits in 2023 will accelerate this bankruptcy process.

6) If deemed legal, student debt forgiveness could cost $30 billion annually for 10-15 years. While relieving a few, it would burden the whole population.

7) Federal oil stockpiles and other basic national security-related materials have been depleted and must be replenished. The Strategic Petroleum Reserve (SPR) used to be 727 million barrels in 2009, but is now approaching 400 million barrels. Basic materials stockpiles used to be $42 billion in 1952 at today’s dollar value, but have now fallen to $1 billion.

8) The Ukraine war has used up vital military backup supplies, and left our own military weakened and unprepared for combat.

9) The Deep State bureaucracy is grossly inflated, with retirement benefits that are much too high.

10) Budget subsidies for alternative renewable fuels are far too generous.

11) Absorbing three to four million illegal migrants costs at least $50 billion annually.

So what should we do about this fiscal mess?

1) No new entitlement programs should be initiated until independent accountants certify that Social Security and Medicare are financially viable.

2) New federal employees can be hired if two current employees leave or retire.

3) The Southern border with Mexico must be closed immediately. Government employees who are obstructing this closure must be fired and then indicted for treason.

4) A major independent business consulting firm should be brought in to restructure and reduce the federal bureaucracy by moving funding and the associated power to the states.

5) A dramatic increase in all forms of energy supplies should be encouraged to maximize GDP growth.

The incompetent, spendthrift Biden administration is squandering the nation’s coffers and destroying the economy. Accumulating high levels of debt is really the equivalent of intergenerational theft by current generations, at the expense of future generations. Americans, young and old, should not tolerate this level of irresponsibility any longer!