Will Rogers once said, “If you find yourself in a hole, the first thing to do is to quit digging.”
Regrettably, America has fiscally dug itself into a national debt which now publicly stands at $14.3 trillion dollars. What’s more, this is the week that we were supposed to raise the debt ceiling, yet again, in order to avert another national financial crisis. But it wasn’t always this way.
In 2001, the nonpartisan Congressional Budget Office (CBO)projected that the federal government would run a surplus of $5.6 trillion over the ensuing decade. Last week, the CBO reported that instead of surpluses, America ran up deficits of $6.2 trillion, a massive swing of $11.8 trillion dollars!
If we are to have any hope in bringing our reckless digging to an end, we must see this for what it is ─ a financial fiasco which demands decisive action and great moral courage. Instead of continuing to kick the “deficit can” down the road, we must pick it up and own it. Time is of the essense for us to adopt a moral, sweeping and detailed deficit-reduction plan.
The Deficit is an Imperative Moral Issue
In making a sincere examination of conscience, the Seventh Commandment (You Shall Not Steal) prompts one to ask: “Do I avoid paying my debts promptly?”
Hopefully, on a personal basis most of us can answer that we do pay our debts on time. But as nation made up of “we the people,” none of us is able to affirmatively respond in good conscience regarding our nation’s debt. Rather, each one of us is presently responsible for more than $46,000 of debt in the publicized $14.3 trillion deficit number and we are far from crafting a credible plan to promptly pay it down. Like it or not, Washington D.C.’s debt is our debt.
The trillions of dollars which comprise America’s unbalanced budget are more than just a set of annoying numbers on a financial statement. Budgets are moral and cultural documents about our economic priorities and the allocation of our finite resources.
Budgets demand economic and moral decisions as to who will and will not pay for specific programs, as well as, who will and who will not receive benefits under those programs. For example, should women’s, infant’s and children’s programs be significantly cut as currently proposed under some plans while funding for Planned Parenthood remains largely intact?
Unfortunately, our nation’s budget faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.
Difficult choices lie ahead as to which programs to cut and how best to cut them. Take Social Security for example. On the one hand, almost half of the elderly would be poor without Social Security. Admirably, Social Security lifts 13 million elderly Americans out of poverty and for more than half (55 percent) of elderly beneficiaries, Social Security provides the majority of their income.
On the other hand, is it morally correct that the vast majority of today’s retirees on Social Security will likely take out of the system much more than they paid into it, and that current workers who have seen their $2.3 trillion in Social Security surpluses callously spent, will most surely pay far more into Social Security than they ever can hope to get out of it?
If we are to be stewards of Providence, our attitudes and actions toward running up the deficit and in reining it in must be done with profound respect for human dignity, employing the virtues of temperance, justice and solidarity. The quality of life for all neighbors, especially the poor, must be primary.
The U.S. Bishops have urged Congress to ensure that budget cuts don’t unfairly affect the poor. After all, the poor and vulnerable did not cause the budget deficit themselves and they should not be asked to disproportionally pay for it.
Still, Church leaders must be much more vocal regarding the need for fiscal reform and the moral imperative to adopt a current plan that will responsibly pay down our debts over time. We will not have the same kind of social safety net that protects the poor if we do not soon fix our debt-ridden financial house that funds it.
In appropriately cutting the deficit, some faithful individuals have posited, “What would Jesus cut?” While this may be good food for thought, perhaps the bigger moral question is: “If we lived as Jesus instructed us to, living simply, sharing all that we possessed with those in need, storing up treasure in heaven and staying out of debt, the deficit would likely and responsibly begin to come down.
Moving from Smoke and Mirrors towards Moral Clarity
Dealing with the deficit in concrete and constructive ways is proving difficult in our polarized political system. Far too many liberals see the deficit primarily as a revenue issue where the proposed solution lies mainly in taxing the rich more. Conversely, far too many conservatives see the deficit primarily as a spending issue where the proposed solution lies in largely reducing government spending.
The truth is that we have both revenue and spending issues surrounding the deficit. Effectively dealing with those twin issues requires us to move from the smoke and mirrors political rhetoric to peeling back the core concerns surrounding the deficit so that a sweeping and detailed deficit-reduction plan may be adopted with greater moral clarity.
Along the road toward reaching moral clarity perhaps we ought to consider the following short-list of deficit directives:
- We cannot grow our way out it.
- We cannot tax our way out of it.
- We cannot “tax-cut” our way out of it, as tax cuts do not pay for themselves, and it is nearing the time that the “Bush tax-cuts” expired for us all.
- We can no longer tap the surplus in Social Security receipts as the system (starting in 2011) now pays out more than it takes in.
- We cannot realistically expect to solve our debt crisis in the long run by issuing more debt today.
- We cannot continue borrowing at our current pace with three consecutive years of $1 trillion plus deficits, where nearly 40 cents is currently being borrowed by the government for every dollar it spends.
- We should make known and acknowledge that the total publicized debt of $14.3 trillion dollars is vastly understated since it does not include the off-balance sheet liabilities regarding unfunded liabilities for entitlement programs.
- We cannot hope to reduce the deficit in a meaningful way by looking principally to the low-hanging fruit of discretionary spending, which was primarily picked over in preventing a government shutdown earlier this year.
- We should be aware that more than two-thirds of federal spending is mandatory, and that the fastest area of government growth is interest on the deficit, which is expected to approach $1 trillion by the end of the decade.
- We cannot afford the amount of “Guns and Butter” we have had where more than 20% of our national budget is routinely allocated to defense. Note, in fighting the War on Terror we lost the pay-as-you-go rules altogether and spent $1.28 trillion according to a recent Congressional Research Service report.
- We cannot meet the expense of making good on all the promised benefits to the sizable senior population that is living longer and costing more without economically harming future generations. Excepting the poor and the most vulnerable, today’s seniors must have more financial skin-in–the-game and not leave the difficult task of dealing with deficits for future generations.
- We must address our structural deficits with respect to Medicare, Medicaid and Social Security since they collectively account for 40% of all present day government spending. The stakes for inaction are simply too great as the Social Security Trust fund for disability benefits is projected to run out by 2018, and in 2036 for retirement benefits. Moreover, the Medicare trust fund is now projected to be exhausted by 2024, five years earlier than last year’s forecast.
- We must lessen our dependency upon deficits as Americans today are depending more on federal aid of all types than at any time in our nation’s history.
For a little over a decade I have been writing and speaking about the dangers of our national deficit, underscoring the notion that it may represent a greater threat to our nation than that of terrorism. Be that as it may, I was nevertheless dumbfounded to grasp the fact that during that timeframe our nation’s publicized deficit increased more than 2.5 times!
My message is not a new one, but borrowed from long ago. Thomas Jefferson warned, “I place economy among the first and most important of republican virtues and public debt as the greatest of dangers to be feared.” In present times, three Senators from the “Gang of Six” recently said, “We have taken an oath to support and defend the Constitution of the United States against all enemies, foreign and domestic, of which our national debt may now be the greatest.”
It is folly to think that America’s republic will endure forever and that deficits do not matter. Deficits do matter. Some historians believe that over-expansion, over-spending and excessive taxation were primary factors in the decline and fall of the Roman Empire.
People think that could never happen here, but then people thought that housing prices would not drop dramatically, foreign sovereign debt would stay healthy and that long-standing investment banks would continue to survive and thrive. People and pundits have been wrong about a lot of things lately and “Black Swan” events are occurring every few years as opposed to every one hundred years.
Doing the right thing regarding the deficit requires coming to grips with the harsh reality that massive deficits mean that the government must do less with less and we the people must do more, pay more, and expect to receive less from the State.
The Call to Shared Sacrifice
Clearly, America’s various wars since 9/11 and the Great Recession required enormous amounts of capital and massive amounts of deficit spending. Still, the budget buck must stop with all of us, here and now. Like our nation’s founders who gave their lives, their fortunes and their sacred honor in founding America, we too must display a similar moral courage rooted in sacrifice.
Yet, we face an uphill battle. A recent NBC News/Wall Street Journal poll found that 80% of respondents are concerned about the federal deficit, but more than 60% are concerned that major cuts could impact their lives and their families; furthermore, they are firmly opposed to cuts in Medicaid, Medicare and Social Security. Similarly, a Washington Post/ABC poll revealed that like most Americans, 71% of Catholics oppose cuts to Medicare and Medicaid as ways to reduce the nation’s debt and support raising taxes on those who have incomes of $250,000 or more.
The time for adopting a deficit reduction plan is running short. The free market system is fully aware that the U.S. government has overwhelmingly financed its long-term debt with short-term paper, leaving it exposed to a spike in the inflation rate, and in continual need of monies for rolling-over its short-term debt. Without a credible long-term solution, America remains vulnerable in accessing capital markets to finance its deficits just like Portugal, Ireland, Greece and Spain are experiencing today.
Warren Buffett once commented that in leaving vast amounts of wealth to children, a child’s development was not facilitated by starting a 100-yard dash at the 50-yard line. Conversely, leaving vast amounts of debt to children hinders the freedom necessary to even run the race when it is started with a 100-pound weight on each child’s back.
Sacrifice is the foundation of our faith and the life that Christ continually calls us to. It is through mutual sacrifice that our marriages are made holy, and it is only through mutual sacrifice that our moral crisis can be answered and America’s s budget deficit responsibly reined in.
As a taxpayer, I am not looking forward to the road ahead. But as an individual striving to live out my faith, I endeavor to embrace the Cross that demands we no longer have more government than we are willing to pay for with taxes.
Our intention should be that God may grant us (1) the courage to adopt a moral deficit reduction plan now and (2) the courage to carry it out over the course of time. And may we the Church answer, “Lord, hear our prayer.”
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