Under President Obama, Republicans decried the alarming surge in federal deficit spending so it may seem like a fair turnabout for Democrats to rail about proposed spending increases under President Trump. But this is a false equivalency, because all deficits are not alike.
It is critical that our representatives in Washington appreciate the fundamental differences between added outlays and debt that promote economic growth, which enables the costs to be repaid, and massive spending for operating expenses such as social welfare programs, which pile debt on debt.
The starting point is to acknowledge that deficit spending signifies spending beyond one’s means, for which one must take on more debt, which becomes an added cost to be repaid from future revenues. This holds true for individuals, families, corporations, and governments. Living beyond the means afforded by current revenues will create serious problems downstream, unless the excess spending is part of a plan that includes sound ways to manage or retire the debt.
To illustrate this, think of making a payment on your mortgage loan. Spreading payments over decades makes sense because your home continues to offer you value as the years go by. This is the essence of capital expenditures, whether for bridges, factories, or anything else with an extended useful life.
Now think about paying the debt on last year’s vacations and restaurant meals. You wanted them then, but they have no economic value for you today. They were operating expenses that provided benefits only when they were incurred; hence, they should have been paid from last year’s income. If your income has not changed, you are in a double-bind: you must keep borrowing to support your lifestyle, and borrow more to pay your carried-over debt. Unless you earn more or lower your living standard, things will only get worse.
In this, government is no different. The vast sums paid for redistributive programs are operating expenses: they do not grow the economy. While they fund recipients’ spending on the demand side of our commerce, any resulting “stimulus” to the supply side is offset by the diversion of wealth — generally through higher taxes — from the private sector to pay for the programs.
The past eight years proved this beyond reasonable dispute, as economic growth averaged close to an anemic 2 percent annually, despite deficit spending that increased the national debt by a whopping 40 percent in just two years. The Democrats’ social-spending binge did nothing to reduce relative poverty and crime, or to raise education outcomes for inner-city minorities, whose job prospects were devastated.
To fix this mess, economic growth must be rekindled. We have much work ahead to accomplish this, including:
- Reducing government’s intrusiveness on our economic freedom by cutting taxes and paring back regulations, so that our businesses return to caring more about customers and less about obeying government dictates;
- Rebuilding our military readiness and supporting our police, because their protection is essential to preserving civilization, without which freedom is meaningless;
- Overhauling public education so that our children are raised to be the good and productive citizens we need, a process that must encompass teaching universal moral values that support the worth of individual human beings and the importance of developing students’ distinct capabilities for being of benefit to one another; and
- Revitalizing our tangible infrastructures.
These measures will increase the deficit in the short run. But, like other sensible capital expenditures, they will yield dividends, and within a remarkably short time. Our history abounds with newly-elected presidents overcoming depressions and recessions by lowering government’s burdens on us and our businesses — as we saw in the early 1920s, 1960s, 1980s, and 2000s, when the economy recovered within two years (although most of those recoveries were followed by a resumption of reckless congressional overspending).
The Democrats will oppose every one of these measures, and can be counted on to use their control over the media to portray the Republicans as hypocrites for running up the deficit. But the Democrats’ real fear is that the Republicans will succeed in making America great again — with more jobs, safer neighborhoods, and better schools that bring the American Dream within reach for all of us, no matter our race, sex, age, or ethnic heritage.
An American renaissance poses an existential threat to the Democratic Party, because it portends a permanent realignment of voters who, having been victimized by decades of the Democrats’ failed policies, want a better tomorrow for themselves and their children.
Added spending by the Republicans to bring this about does not constitute hypocrisy. Rather, it is a necessary step toward reclaiming the moral high ground for America.
Blaine Winship is the author of Moralnomics: The Moral Path to Prosperity (Moralnomics Press), available in hardcover from moralnomics.com and as e-books. Winship was lead trial counsel for 26 states in their constitutional challenge to ObamaCare.
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