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The Debt We Owe

Alaska’s Congressional Race and the National Debt

 

June 2, 2022

 

 

 

Earlier this week I posted a review of the 48 candidates who are running to fill the rest of the term for Alaska’s only Congressional seat. My approach was simple: find the candidate on the web and see what they had to say about the issues.

 

There are a lot of controversial issues out there on which people will hang their hat when it comes to picking a candidate. Yet there is one issue that rarely gets addressed in American politics. It has generated high inflation, reduced our freedom to choose, and has mortgaged the wealth potential of future generations. It is the national debt.

 

Of the candidates who are running, 48 are listed on the ballot but only 22 have websites. Of those, only two candidates addressed the national debt. Rather than expound further on the issue, let’s see what they had to say.

Chris Bye (Libertarian)

 

“Within days our National Debt will be 29T Dollars. Each American woman, American man, and each American child owes $87,063. Are you getting your money’s worth? It is 126% of our Gross Domestic Product. This is unsustainable. Republican and Democratic Congressional representatives however worry about re-election and special interests above Freedom and Liberty. While they elect to spend more money, they have the audacity to discuss extending the debt limit. Indentured servitude was made illegal with the 1867 Congress and yet these representatives continue to enslave future generations. Chris sees this as financial theft, generational financial fratricide. Chris desires to see the budget reduced to less than 80% of the GDP in four years. This can only be accomplished through aggressive cuts in spending. Chris believes spending cuts of 10-15% is a good start. Atop this proposal Chris proposes a 15% cut in personnel across the Federal Government. With a further cut in spending of 10% cut in FY 2026. If a proposed bill adds to the debt Chris’s answer will be NO! Chris supports the Balance Budget Amendment to the Constitution to prevent taxation of future generations without their consent. “

 

Sarah Palin (Republican)

 

“Government debt is like an anchor around the neck of future generations. Our federal government currently spends over $500 billion per year just on interest on the money we’ve already borrowed, even with rock-bottom interest rates – continuing to borrow more money, year after year, is unsustainable and irresponsible. Borrowing money to pay for deficit spending sucks money out of the economy, costing us greatly in terms of current and future jobs and economic growth.

We need to get our fiscal house in order – fast. We need to eliminate unnecessary spending in every category of the budget, but that’s only part of the solution. Ultimately, the only way to meaningfully address the debt crisis is to get entitlement spending under control. Instead of creating new entitlements, like the Democrats try to do every time they see an opportunity, we need to pare back our existing entitlements so there’s enough money for the people who truly need it. Congress also needs to enact and enforce strict spending limits, ideally through a Balanced Budget Amendment that would restrict federal spending to a responsible level below 20 percent of GDP. “

 

If you know anything about web page design, designers will typically avoid a lot of narrative, relying instead on catchy phrases and graphics. So it is interesting that these two candidates not only mentioned the national debt, they also took some space to explain the problem to the voters.

The Bottom Line

 

Every issue anyone discusses costs money. The ultimate question is whether we care to pay for all those wonderful programs through more debt or is the national government going to join state and local governments and spend only what they receive? As Chris has pointed out, the total debt is 126% of GDP. He is proposing cutting government spending by 20% just so the debt can be trimmed back to 100% of GDP in several years!

 

Sounds radical. Consider the implications when the interest rate doubles. As the government bonds mature in the coming years, they will replace them with new bonds because, alas, the government will not have the money to pay off the bonds. The new bonds will show the current interest rates. The current budget allocates about 5% of expenditures to pay for debt. What happens when interest rates climb and the budget allocation climbs up to 10% or 15%. What programs will be cut to pay for the added interest costs?

 

I think you see my point. Interest payments reflect what it costs our democracy. If we balance budgets, there are 10-15% of choices we cannot make. Think what you would do if you did not have to pay rent or a mortgage. What would you do with that money? You would choose to do many things: travel, buy a new car, collect gold, start a business. The same works for our democracy. When we have to pay a debt, it means we cannot choose to spend tax money on things the public desires.

 

Embedded in the expenditures are “entitlements.” Social Security is one of them. Beginning in 2035 there will not be enough Social Security taxes collected to cover what is going out. The benefits paid will need to come from the discretionary budget. Are we willing to ask that the Social Security taxes be raised or will we require future benefits to be cut? The same applies to Medicare. Together, these programs take 27% of the federal budget. Theoretically, they should be self-sustaining. In reality, they are not. Beginning in 2035, we will be choosing to finance social security at the expense of other programs.

 

The Balanced Budget Amendment

 

Both candidates are probably referring to the latest amendment proposed by Budget House Republicans. It targets expenditures at 20% of GDP, and requires that expenditures not exceed revenues. An exception is granted for times of war.

 

There are a lot of pros and cons with the Balanced Budget Amendment that can be a topic for a future article. It is also a steep hill to climb to get the amendment before the states for ratification.

 

Truth be told – if there was a political will an amendment would not be necessary.

 

Who Do You Trust?

 

I trust both of these candidates to stand for radical cuts in government spending. But I must say I don’t trust the Republicans to do the job. Invariably, the way politics works in Washington, any rational reduction in spending will be met with the obstinate resistance of Democratic leadership in the Senate. In years past, this unwillingness to craft a balanced budget has resulted in government shutdowns and brinkmanship when it comes to debt extensions.

 

At some point, the Senate will have to take the bull by the horns, shut down the government and keep it that way until the Democrats come to the table and compromise. Every other level of governance in this country seems to know how to craft a budget. Congress needs to do the same.

 

The key to this brinkmanship is to engineer the budgeting process so that critical functions can be addressed separately from discretionary functions. Cutting off Social Security, Medicare or defense spending makes no sense.

 

Debt extensions will go on infinitely because it makes no sense to risk the credibility of the US government on a systemic spending problem. Address the spending.

 

So who do I trust to do this? Rand Paul is the closest thing to a Libertarian in the Senate. He is the lone ranger when it comes to budgetary accountability. He is one of the few who has honestly addressed the issue and his voting record shows it. He is actually a pretty decent instructor on how the economy works. I recommend his channel on Rumble.

 

We need someone who can stand up to Republican leadership when they balk at delivering on this promise to reduce the national debt. A Libertarian is sure to do it. A Republican, aka Sarah Palin, is likely to do it.

 

I voted Republican consistently beginning in 1984, with a few exceptions for local elections. In 2020, I voted Libertarian and you can read why. One factor that weighed in on this matter was the profligate spending of the Trump administration and the lack of courage exhibited by the Republican leadership on several occasions since the 1980’s to hammer down the debt.

 

I am voting Libertarian because there is a creditable candidate running. Republicans? You need to earn my vote.

 

 

Meet Chris Bye

 

 

Resources

 

Federal Spending by Category and Agency”, DataLab, Spending by Source Categories and Agency in 2021

 

 

A Balanced Budget Constitutional Amendment”, House Republicans Budget Digest, March 5, 2018

 

Why Is Social Security Running Out of Money?”, Investopedia, by Jean Folger, October 14, 2021

By Eric Niewoehner

© Copyright 2022 to Eric Niewoehner

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