We are facing a budget crisis in Washington DC, according to the leftist media. Without the House Republicans agreeing to continue current deficit spending, the world as we know it will end. The only reasonable solution, according to the Democrats, is to continue the excessive spending that has exploded in the past decades.
Our country has become hooked on Keynesian economics which teaches that during a time of crisis, greater deficit spending will help moderate the negative economic impacts of the crisis. Before we became hooked on Keynesian economics, the federal government acted like most state governments and lived within a balanced budget.
States, just like our federal government, face tough economic times, States, however, must moderate their spending when tax receipts drop. This is tough for state lawmakers because no one enjoys cutting budgets or lowering spending increases.
Unfortunately, our federal government does not have a balanced budget requirement. Boomers will remember when automobiles occasionally had governors on them. The governor would limit the speed of the automobile to the speed the governor was programmed. The balanced budget requirement is a form of a governor. It forces spending to stop at certain limits. Without balanced budget requirements, all states would have large deficits because no politician, Republican or Democrat, likes to control spending.
The United States government has no curb on its spending. Between 1970 and 1977, the federal budget deficit averaged $27 billion. In the 1980’s, the budget deficit averaged $171 billion.
Those were the “good ‘ol days” of budget deficits. In the 2000’s, the federal budget deficit averaged $471 billion. Between 2011 and 2019, the average deficit was $777 billion. The past 3 years the budget deficit has averaged $2.2 trillion.
How did we get so out of control with Republicans and Democrats in charge. Both political parties have always had some “emergency” to give as a reason to increase spending. The most recent excuses for Republicans and Democrats was the financial crisis of 2008 and more recently the Covid pandemic.
There is justification for the frustration that voters feel about the potential government shutdown. Noone wants to have our service men and women put in harm’s way by a lack of funding.
The reality is that there appears to be no other way to lower the spending increases. Our deficits have far outpaced the deficits that Greece encountered a dozen years ago during their financial crisis.
In life we learn that there is no gain without pain. If you want to lose weight, you must eat less and exercise. A magic pill is temporary and may come with unknown consequences. Likewise, there will be no economic progress in this country without the pain that emanates from contracting the federal budget.
The threat of a government shutdown is scary but it is probably the only tool we have to get spending under control. Republicans and Democrats who ignore the peril of budget deficits are similar to a parent who withholds needed medicine from a sick child because the medicine tastes bitter.