In “Applied Economics,” one of his many great books, economist Thomas Sowell says, “Elected officials’ top priority is usually getting re-elected, and their time horizon seldom extends beyond the next election. Laws and policies that will produce politically beneficial effects before the next election are usually preferred to policies that will produce even better results some time after the next election.”
There is no better model for this political phenomenon than government spending. Politicians love to spend lots of money because it’s the easiest way to make it look like they’re trying to solve real problems. Politicians especially love to spend borrowed money because they can stick future taxpayers, not current voters, with the bill. When Congress returns from this year’s August recess, it appears we’ll be seeing this irresponsible behavior on full display.
To note, government funding for the current fiscal year is set to expire in October, which means Congress must approve new rounds of spending to keep the government open. Some politicians, with guilty parties on both sides of the aisle, are now calling for increases in spending next year above the spending caps lawmakers put in place back in 2013. President Obama has said he will veto any legislation that does not increase both domestic spending and defense spending.
Smaller Deficits Are Still Deficits
In a perfect world, government spending should increase periodically to account for economic issues like growth and inflation, as well as isolated events such as wars or natural disasters. However, the blanket increases some are calling for next year are nothing short of completely reckless and ignorant towards our current budget situation.
The big spenders in DC are being spurred on by reports that the deficit, the annual measure of how much more goes out via spending than comes in via taxes, has fallen to its lowest level in real and nominal terms since 2007. While this is certainly good news, there are three important things to remember: First, the federal government is still running a deficit, which means the budget is not balanced. Second, the falling deficit is in part a result of the spending caps that Congress and President Obama may be looking to scrap. Third, the deficit is projected to increase even with these spending caps still in place.
The current deficit for 2015 is projected at $426 billion. Compared to the $1.4 trillion deficit in 2009, that is certainly a very large improvement, but it shouldn’t be considered a finish line. That is still an enormous amount of money we are borrowing that we must ultimately pay back some day. Further, that $426 billion will grow because of the associated interest on that debt. Current interest payments on the accumulated national debt of over $18 trillion are projected to be roughly $230 billion for 2015 alone. All we’re doing is adding nearly half a trillion a year to the accumulated national debt of $18 trillion, which is still a major failure of fiscal policy.
Stop Spending Money We Don’t Have
Apologists for this recklessness claim government spending can spur sustainable economic growth and investments made today are worth the cost for the benefits they’ll provide tomorrow. The problem with that logic is reality itself. Government spending is notoriously wasteful and is too often directed towards endeavors that do not generate wealth or value. As the old saying goes, you never spend someone else’s money as wisely as you do your own. Is there anything else politicians really do other than this?
There are endless examples of poor government investments, from the Solyndra debacle to the extravagant spending by agencies like the General Services Administration. That was the agency famous for hosting lavish employee conferences in Las Vegas, forever emblemized by this guy.
The GOP needs to accept some of the blame for poor government investments, as well. Republicans in Congress tend to vehemently defend every penny of defense spending. While a strong national defense is one of the few things our federal government now provides that is actually enumerated in the Constitution, there is plenty of room for reform at the Pentagon. Quite frighteningly, it is becoming abundantly clear that the F-35 Joint Strike Fighter, the product of a $1 trillion-plus program and arguably the most expensive single weapon in human history, is an ineffective and all-around terrible aircraft.
U.S. Spending Is Already Wildly Out of Control
Finally, and perhaps most in keeping with Sowell’s warning, current deficit projections are downright dismal. By 2025—as in, less than ten years from now—deficits will surpass $1 trillion annually under current law. Let’s emphasize that under current law part, as prominent members of Congress and President Obama are now suggesting we actually increase spending when we’ll already be adding at least a trillion dollars in new debt each year within the decade.
Government undoubtedly has important roles to play in our society, and these things require financing. That being said, continuing to play fast and loose with the nation’s finances is unacceptable. Further, the excuses for higher spending surrounding our “lower” deficit are downright pathetic and emblematic of the worst of Washington.
Government spending should be pegged to the size of our economy at a level that would produce consistent surpluses and be in line with historical spending averages. This would be somewhere around 18 percent of gross domestic product.
A proposal called the “Penny Plan” would include such a measure and balance the budget within five years. If we implement this policy, nothing stops Congress from spending more money; they’ll just need to make sure the private sector is growing, as well. Our best and brightest elected officials would quickly figure out that the best way to do that is to simply get out of the way.