As official Washington gears up for an election year budget season, it's important to review a few salient, and profoundly inconvenient, facts.
In its report on federal income and outlays for February, the Congressional Budget Office noted that:
The federal budget deficit totaled $830 billion in the first five months of fiscal year 2024…That amount is $108 billion more than the deficit recorded during the same period last fiscal year: Although revenues this year were $121 billion (or 7 percent) higher, outlays rose more—by $228 billion (or 9 percent).
Outlays in the first five months of each year were reduced by shifts of certain payments that otherwise would have been due on October 1, which fell on a weekend…If not for those shifts, the deficit thus far would have been $903 billion. $117 billion more than the shortfall for the same period in fiscal year 2023.
Bottom line: Uncle Sam is spending money like it's going out of style.
But there's another way to look at all this red ink, and the bipartisan political perfidy that spurs it to new, terrifying depths. As Leslie Rubin and Dan Mitchell write for FEE, we should be thinking of the federal debt as the biggest Ponzi scheme every conceived:
For all intents and purposes, Uncle Sam is running a Ponzi scheme as he has no way to pay back the debt other than borrow more money…Additionally, Modern Monetary Theory enthusiasts say that the country can borrow endlessly with no harmful effects. How? By printing money! Only an idiot would believe that—it is the furthest thing from true reality.
For those who may have forgotten, Modern Monetary Theorists (MMT) believe:
…that monetarily sovereign countries (such as the U.S., U.K., Japan, and Canada) which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending.
Put simply, modern monetary theory decrees that such governments do not rely on taxes or borrowing for spending since they can print as much money as they need and are the monopoly issuers of the currency. Since their budgets aren't like a regular household's, their policies should not be shaped by fears of a rising national debt.
It does raise questions about their faith in the laws of gravity – a simple thing like what goes up must come down. But MMT is hardly the guiding light of our native political class. Not because they don't understand or subscribe to it. Rather, the guiding theory of our political class is to do whatever is needed to win reelection. Even if it means ignoring the debt bomb everyone can see and hear and is rapidly eating up the budget.
Mitchell and Rubin urge that the most effective way to change our fiscal course is to “[q]uit being the silent majority, and take an active role in fixing the problem.”
Fair enough. But it is notoriously hard to energize a broad mass of voters around fiscal issues because the costs of inaction are dispersed, while the benefits of more spending are highly visibly and concentrated.
In other words, “I get mine, why should I care?”
Voters will continue to believe that until the day arrives when they no longer get theirs….because no one will lend a dead beat Uncle Sam even more money to pay his bills.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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