Six weeks that led to America’s ruin
‘Democracy is a system that will work right up until people realize they can vote themselves rich,” is a saying that’s been attributed, with slight variations, to everyone from Benjamin Franklin to Alexander Hamilton to Robert Heinlein’s libertarian sci-fi heroes.
It doesn’t matter who said it first. What’s important is that it finally happened, after a 230-year run, and it may be the misstep from which the United States can never recover.
In December, Congress passed and President Donald Trump signed a massive tax cut the size of which could not be justified either by the nation’s financial ledger or economic conditions. It will cost the government at least $1.5 trillion in revenue over the next decade.
The national debt increased by $671 billion in 2017, meaning the country spent about $2,000 more per resident in a year than it collected. The national debt exceeded $20 trillion, or $62,000 per resident. Those numbers mean Americans are shortchanging the government, not overpaying.
Nor could it be argued, with unemployment at 4 percent and the economy in a ninth straight year of expansion, that the tax cuts were necessary to create jobs or stimulate investment. From a strictly economic point of view, such cuts could have been justified if they came with big slashes in spending.
Instead, six weeks later, Democrats and Republicans came together to pass $400 billion in new spending for the military, domestic programs and disaster recovery.
The combination of the tax cuts and the spending increases has the government saying it will need to borrow $1.2 trillion over the next year, nearly doubling the annual deficit. That money will be needed to fund the operations of a nation whose economy is booming, and whose companies and wealthiest citizens are flush with cash.
We have voted ourselves rich. It is hard to see how the nation can be persuaded to reverse that vote. And if it won’t, historians could someday point to the past six weeks as the beginning of the end of America’s greatness.
Sen. Bernie Sanders and his liberal friends always have been factually correct: The United States can afford to provide lavishly for its citizens, as long as it is willing to raise enough in taxes.
On the other side of the argument, Sen. Rand Paul and his small-government gang also are correct: The United States can afford to slash its tax burden if it is willing to provide far fewer goods and services for its people, and spend far less on the machinery and personnel and consequences of war.
But now we have closed our ears to the pleas of Sanders, and the warnings of Paul. We have come together to deny the rules of math and economics.
As we continue to borrow, interest rates and inflation will mount. The percentage of our budget dedicated to paying for past excesses will grow. This will happen just as the bulk of baby boomers are retiring. They expect 25 or 35 years of Social Security checks we have not funded, and 25 or 35 years of the most expensive health care the world has ever known, which we have not funded.
The bubbles of asset pricing that are expanding, inflating the prices of stocks and real estate, will burst. The weapons normally used to recover from recessions and depressions, cutting taxes and increasing government spending, will already have been fired.
The remaining options then, devaluing our currency or defaulting on our debt, will destroy our position in the world and the security of our people.
These are not yet things that have to happen. But they are the things that will happen if we do not change course.
Lane Filler is a member of Newsday’s editorial board.