analyticsbox | Oct 13, 2021
Chicken Little May be Right...
if we stay on the economic course we are on
Good economists (read the Facts No Spin #17: The Good Economist vs. The Bad), can see where we are headed. And It isn't pretty. Is Chicken Little right? Is the sky falling?
Fiscal policy since 2000 has been trending in only one direction, down. As discussed
in No Spin #20, the federal debt has grown considerably up to 2000, but economic growth outpaced it and it remained a relatively controllable 55% of GDP or less from 1960 thru 2000. Our debt has now ballooned to 130% of GDP currently and will grow by the Trillions over the coming years, with no end in sight to the deficits, per the nonpartisan Congressional Budget Office.
So what? Many seem to think this is fine and we can borrow ourselves into infinity. If that were true, then why not just borrow more and send every person $100,000? Because it isn't true, see No Spin #4, The Great Ponzi Scheme. Besides the actual debt of 28.5 Trillion today, the unfunded liabilities - mainly Social Security, Medicare, Medicaid, and Pensions - are totally upside down and will need to be subsidized by the government to maintain the promises made, growing the deficit and debt even faster (see Facts No Spin #6).
Fiscal Insanity is the word for what we are doing to ourselves. And the current social programs being considered today, just make things worse. The nonpartisan Congressional Budget Office, CBO, has confirmed the long term implications of what we are doing.
There are ways to help those that truly need assistance, without breaking the budget and still moving toward a balanced budget. Good intentions may sell well to the public, but it is bad public policy for the long term as it means endless deficits - an economy killer!
So what are we to do to fix this? As discussed in Facts No Spin #16, the formula for economic progress is less government and more funds in the productive private sector. Controlling government spending and slowly evolving to a balanced budget, is the first step.
The Bottom Line
If we do not wake up to the reality of the ‘free stuff’ that we want to give to all, and the economic impact as forecasted by the nonpartisan CBO, we will find the debt to future generations unworkable at some point. And when that point comes, it will be too late to fix it without the sky falling. Chicken Little will have been clairvoyant.
We can’t let this happen! We need to slow government spending, help the needy -- not everyone, and balance the budget!!!