7/30/2019 Attention Washington: fix our spending problem

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Happy New Year! Attention Washington: fix our spendingproblem

As last week came to a close the nation was peering over the edge of Fiscal Cliffwith only a few days left to fix the problem, and it seemed likely that nothing more

would be done before 2013 arrived.

Nearly everyone likes to celebrate holidays, but when there is a crisis afoot, thepeople whose duty it is to address that problem are expected to make theappropriate sacrifices and do their job. Finding that your house is on fire, you expectthe fire department to respond to your call. You dont expect to be told, sorry, butall firefighters are taking the holiday off.

Where the fiscal cliff is concerned, the public servants we pay to responsibly run ourgovernment have put that priority behind others they consider more important.

They went home for the holiday, or to Hawaii.

President Obama tells us over and over how the policies of conservatives andRepublicans are responsible for "getting us in this mess." But that is wrong: whatgot us in this mess is decades of irresponsible and improper spending and taxation.It has not always been like it is today, and we are the victims of wrong-headedpolicies from those public servants.

Senator Kent Conrad (D-N.D), retiring Chairman of the Senate Budget Committee,told the National Press Club recently that raising both spending and taxes reallyshould not be a problem, when viewed as a percent of gross domestic product(GDP). He noted that since 1969 the budget has been balanced five times and taxrevenue was around 20 percent of GDP each of those times, and that the budgethas never been balanced at the historical level of 18 or 18.5 percent of GDP, the

level many Republicans favor.

Spending for Fiscal Year 2012 exceeds 22.9 percent of GDP, according to the 2012edition of Federal Spending by the Numbers. In the past 20 years, federal outlayshave grown 71 percent faster than inflation, and the average American householdsshare of this spending is $29,691, or roughly two-thirds of median householdincome. Federal spending is projected to continue increasing at this rate, pushingtotal government outlays to $5.5 trillion a decade from now, and to about 36percent of GDP in the next 25 years. To quote Mr. Obama: Thats irresponsible.

Thats unpatriotic.

Sen. Conrad is a fiscal hawk that sensibly advocates balance between revenue and

spending, a philosophy that would eliminate the annual budget deficits the Obamaadministration loves. But like so many of those in Congress and in theadministration, he accepts the current levels of both spending and taxation asappropriate. They are not only inappropriate, but are eight times higher than theaverage level over the first 130 years of our history.

Dean Kalahar, economics teacher and author ofPractical Economics, explains thatfrom 1787 to 1849, federal spending averaged 1.7 percent of GDP. For the next 51years, from 1850 to 1900 (including fighting the Civil War) spending averaged only

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3.1 percent. And from 1901 till 1930 (including fighting WWI) it never reached 8percent, and averaged approximately 3.2 percent.

During the height of the progressive movement, including FDR's New Deal, federalspending never exceeded the 1934 level of 10.7 percent. And even though as WWIIraged and spending shot to 43.6 percent of GDP, four years later it had fallen to

11.6 percent. For 130 years of our existence, federal spending averaged around 2.5percent of GDP, says Mr. Kalahar.

That level of spending was close to what the Founders had in mind for their limitedgovernment. But it has grown incrementally, as politicians abandoned constitutionallimits and today this statist, socialistic philosophy has moved us toward fiscalcollapse.

Mr. Kalahar understands what public servants and many, perhaps most, Americansdo not: Government spending is taken directly out of the pockets of the people, orout of the economy. Every dollar consumed by our profligate government is oneless that could fund productive advancement in the private economy, he wrote.

Every dime needlessly spent by government comes at the cost of efficiency inmoving scarce resources to their most valuable use.

What that means in simple terms is that if left alone, the private economy will mostoften cruise along comfortably, repair itself when necessary, and the genius ofAmericans will produce an expanding economy that benefits us all.

The just and proper fiscal balance is to give the state what it needs to protect youand your property while at the same time protecting you and your property fromthe state, he wrote. Looking at the low historical trends that allowed this greatnation to lead the world into prosperity would be a good place to start an honestdebate in determining federal spending. A good rule of thumb would be to give half

of what the politicians ask for.

And, as economist Walter Williams reminds us about federal spending, "If 10percent is good enough for the church, it ought to be good enough for Congress."

As we have incrementally increased spending as a percent of GDP, now we mustbegin to incrementally return to the spending level before 1930.