by Matt Kibbe
It’s all a means to an end.
NOT TOLERABLE
THIS IS NOT A NEW PHENOMENON. IT GOES ALL THE WAY BACK TO THE beginnings of the Republic. Like the folks in the movement today, the original “Tea Partiers” were a community of patriots who had self-organized in defense of their threatened liberties. On December 16, 1773, a band of Bostonians styling themselves “Sons of Liberty” and led by Samuel Adams gathered in Boston to petition His Majesty King George III and the British Parliament for redress of grievances. They did so, of course, in that wonderfully memorable—and nonviolent—way of holding a “tea party” in Boston Harbor. The following year, Parliament responded—with abject hostility—to the Boston Tea Party, closing the city harbor and passing a series of repressive edicts that history remembers as the “Intolerable Acts.” These laws systematically stripped colonial Americans of their individual rights. One of those dictates, the Massachusetts Government Act, included a provision that prohibited citizens from assembling in town meetings more than once a year, subject to the discretion of the Crown-appointed governor. This was the British government’s attempt to force American citizens to subjugate themselves to Parliament’s unquestioned authority over the freedoms and prerogatives of colonials.
But the Intolerable Acts backfired: American moderates who already sympathized with the grievances of the radicals flooded to the cause of revolution. As Parliament continued to erode the liberties of the colonies, the oppressed colonists responded by organizing among themselves. The theory of American unity was not a novel idea—Benjamin Franklin had proposed a loose confederation among the colonies as far back as 1754—but the practicalities of such an arrangement proved too difficult to overcome. The colonies after all thought of themselves as independent from each other, subject only to the British Crown. Although the Intolerable Acts didn’t apply to all the colonies equally—the Massachusetts Government Act applied only to Massachusetts, obviously—the colonists feared the precedent. If Parliament could eradicate freedom of assembly in one colony, what would stop it from doing so in others?
The colonists responded to this real fear in a variety of ways, the most effective of which was the creation of the Committees of Correspondence. By 1774, eleven colonies had set up their own Committees, which functioned as a de facto “American” government, acting in secret from British authorities. It was the individual Committees that, in September 1774, established the First Continental Congress in direct response to the Intolerable Acts.
Today, the revolution that followed is too easily summarized as a reaction against “taxation without representation.” While that was certainly part of Parliament’s offenses, the colonists didn’t revolt only because of taxes. They revolted because, by steps large and small, Parliament had gradually eroded their historical rights as British citizens. Beginning with the Magna Carta in the thirteenth century and through subsequent eras, with the establishment of common law and the principle of representative government, the Englishman in the 1700s enjoyed a level of freedom unmatched in the rest of Europe, never mind the world. More to the point, wherever Britain planted its flag, there British common law—and the rights of Englishmen—would follow.
Except that by 1774, the British colonists in America were beginning to realize that this ancient balance between citizen and government no longer applied to them. Their revolt was an attempt to retrieve a level of freedom that had been gradually destroyed after, in Jefferson’s immortal phrase, “a long train of abuses and usurpations.” That—and not simply “taxes”—was the principal cause and justification of the American Revolution.
Similarly, the Left and the mainstream media like to dismiss the Tea Party as a group of people disgruntled over paying taxes. They’re half right. Taxes are too high, and when our taxes go toward wasteful government spending, we justifiably become disgruntled. But the grievances of the Tea Party go deeper than that, just as the grievances of the colonists went deeper than taxation without representation. Out-of-control spending and high taxes are just the symptoms of a government system that is eroding the individual rights of American citizens. As the example of the American Revolution shows, attempts to redress this erosion are met by subtle and not so subtle forms of government repression of our individual voices. The arbitrary differences in treatment between two groups of Americans—the Tea Party and Occupy Wall Street—both attempting to exercise their First Amendment rights is just one small example.
But the Second American Revolution will not involve violence, throwing tea into Boston Harbor, overthrowing the government, or the destruction of anyone’s property, private or public. The Tea Party revolution is about education and the decentralizing forces of cheaper, quicker information. This revolution does not require a better leader or “another Ronald Reagan.” The next revolution in America involves individuals, in voluntary cooperation, holding government accountable. This was our original mandate from the Founders: to protect, as eternally vigilant individuals, that “sacred fire of liberty” George Washington spoke of so eloquently.
UNDERWATER, DROWNING IN DEBT
IN THE NINETEENTH CENTURY, BRITISH STATESMAN WILLIAM GLADSTONE coined a set of “golden rules” for economy in government: “Limit spending, tax lightly, borrow the minimum, maintain a surplus, pay off debt.”26 These days, it seems the only people in our society who don’t have to abide by these rules are politicians and children. Children, at least, have an excuse. Our politicians, meanwhile, have turned every one of these maxims on its head. And the result is a nation drowning in debt.
Fiscal profligacy is as inimical to individual liberty as any overt oppression. In some ways, it’s even more dangerous, because it tends to creep up on an unsuspecting populace. How bad has Uncle Sam’s fiscal problem become? Let’s start by putting it in “kitchen-table” perspective. Imagine Uncle Sam really is our uncle—a living, breathing individual. If you take the existing federal budget figures and simply erase the last eight zeroes from each, you can immediately see how serious his problem is.
OUR UNCLE SAM’S
PERSONAL BUDGET, 2011*
Uncle Sam owed $154,762 last year. But because he spent 56 percent more than he took in, he added nearly $13,000 to his outstanding debt. He borrowed 36 cents for every dollar he spent. And the trouble is, he’s been living this way for years. Now he’s asking us for another $13,000 loan for next year. Should we give it to him? Or should we do what any sensible family would do and take away his credit card and ask him to revise his consumption pattern?
By the way, I could have included in this table a line showing the House Republican pledge to cut $1,000 from Uncle Sam’s 2011 budget (that is, $100 billion). Instead, they only managed to produce the $385 you see listed ($38.5 billion). That puny 1 percent savings came about only after much gnashing of teeth and threats of partial government shutdowns. Imagine what it will take to produce real change.
From 1790 to 1930, federal spending averaged just 3 percent of national output. From the end of World War II through 2008, it averaged about 19.3 percent. In 2009, it shot up to 25 percent, and the average for the past four years has been 24 percent.27 Uncle Sam is consuming nearly one out of every four dollars in value generated in the United States every year. In 1960, the government spent approximately $97 billion, or about $500 per person. This year, 2012, federal spending is expected to surpass $3.7 trillion or nearly $12,000 per person.28 Federal spending has increased thirty-eight-fold over the past half century; twenty-four-fold on a per person basis.
As our government has grown, so has its chronic habit of borrowing. From 1790 to 1930, our federal deficit, the amount of money our government spends annually that it does not have, averaged one-third of 1 percent (0.3 percent) of national output. From 1947 through 2008, deficits averaged 1.5 percent of output. Since the end of 2008, they’ve averaged 8.6 percent.29 The deficit hit $1.4 trillion in 2009, the highest yearly shortfall since 1945.30 In fact, the three largest deficits of postwar history have all occurred in the pas
t three years: 2009 (10 percent), 2010 (8.9 percent), and 2011 (8.6 percent). The fourth biggest postwar deficit is expected to occur this year, 2012 (7 percent).
The result of all this borrowing? A truly staggering debt. Two years ago, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, shocked the Washington establishment by declaring that “the single-biggest threat to our national security is our debt.”31 He was right. As of December 7, 2011, the gross debt of the United States Government stood at exactly $15,046,397,725,405.16 (i.e., more than $15 trillion32), and the most debt in our nation’s history, in dollar terms, and the second most as a share of the economy. The all-time peak was in 1946,33 when it was equal to 126 percent of the nation’s output. Three years ago, the debt equaled 75 percent of output; today, it’s 103 percent and rising. This generation of Americans has managed to pile up almost as much debt as did the generation that waged World War II, and more debt than the generation that waged the Civil War (on both sides!).34
To put this in perspective, during the past four years, the debt has been growing by an average of $1.7 trillion a year, $139 billion a month, $32 billion a week, $5 billion a day, $190 million an hour, $3.2 million a minute, $53,000 a second. In the time it will take you to read this sentence, Washington, D.C., will have added roughly a quarter of a million dollars to the national debt. In the time it has taken you to read this paragraph, the debt will have grown by nearly $2.5 million.35
Divide the national debt by our current population of about 310 million people, and each American’s personal share of the debt—your share and mine—is about $46,400. This amount is currently growing at the rate of $5,400 a year, $450 a month, $100 a week, $15 a day, 60 cents an hour, one cent a minute, every minute, without cease.
Using accounting practices that would make even Bernie Madoff blush, our staggering national debt does not account for an additional $100 trillion in unfunded liabilities that will come due as the baby boomers retire and our Medicare and Social Security programs attempt to fulfill their obligations to retirees. Add that $100 trillion to the $15 trillion that is on the books, and every single one of us owes roughly $370,000.
SPENDING LIKE PIGS?
WHEN WE COMPARE OUR SITUATION WITH THAT OF OTHER COUNTRIES, things look even worse. Europe has been trying for the past few years to stave off a domino effect of national debt crises among its member states. At the time its debt crisis began, Greece’s debt load was roughly 137 percent of its national output; for Portugal, the comparable figure was 82 percent. Together with Spain and Italy, these countries are members of the notorious PIGS group of European nations teetering on the brink of financial default. With a gross debt load equal to 103 percent of GDP, we are second only to Greece. And we definitely exceed her, if we count those unfunded liabilities.36
Greece’s debt has already been downgraded by her global creditors, creating a domestic budget crisis, political unrest, and rioting. The only thing keeping Greece from defaulting on her massive debt is the generosity of European taxpayers, especially the Germans, who have agreed to massive bailouts. A lot of experts think these bailouts won’t work, and ultimately American taxpayers will be asked to bail out the bailouts, as it were. If that fails, who will bail us out?
You say, But we’re America, the world’s economic superpower. What happened in Greece can’t happen here. Global bond markets say otherwise. The first serious sign of impending crisis came last year, in the wake of the Great Debt Ceiling Debate in Washington. Seeing our leaders utterly unable to agree on even modest changes to stanch the massive flow of red ink, Standard & Poor’s downgraded U.S. government-issued debt from the highest possible level, AAA, to the next highest, AA+. This was a gentle warning shot across the bow. Next time, they won’t be so kind. All three of the top global credit rating agencies—Fitch, Moody’s, and S&P—have warned that they intend to downgrade us in 2013, absent serious deficit reduction.37
Merely to stabilize the debt as a share of the economy, we would have to reduce annual deficits to no more than 3 percent of national output. Recall that deficits are currently in the 8 percent range. What happens if we don’t stop the debt? Downgrades will force us to pay higher interest rates when we borrow, which will make our fiscal challenge even worse. Federal interest payments today equal about 1.2 percent of national output, but on our current course they will quadruple to about 4 percent by 2020.38 Many economists define the “point of no return”—the point at which some form of debt default becomes unavoidable—as having been reached when interest payments exceed 10 percent of revenue. Because of our unique position in the global economy, Moody’s grants the U.S. leeway on this metric, generously defining our “point of no return” as occurring when our interest payments exceed 14 percent of our revenue.39 Either way, we’re in trouble. Interest payments currently equal 10.5 percent of revenue, and are expected to exceed 14 percent in the next two or three years.40
The root problem underlying every fact and figure I’ve recited is centralization of power and information in big institutions that lack accountability. The biggest culprit is the tendency of the federal government to centralize authority from the top down. Governments naturally collect responsibilities, grow budgets, and expand their reach. The Founders were keenly aware of this trend, having lived under the arbitrary tyranny of a parliament and of a king who decided from across an ocean—effectively a different world, then—for the people he supposedly governed.
Today, the Constitution seems to have diminished in its relevance to the actions of the legislative and executive branches of government. There are no practical limits on government action. For every problem—real or imagined—there is someone inside or outside demanding a government solution.
FAILED MANAGEMENT
DESPITE THE OMINOUS STATISTICS, SENATE MAJORITY LEADER HARRY Reid, Democrat of Nevada, has refused to pass a budget resolution—the blueprint that sets the agenda for annual appropriations and program authorizations for the fiscal year—for three years running. The Budget Act requires that Congress pass a budget resolution by April 15 of each year,41 the same day Americans are required to pay their taxes: “On or before April 15 of each year, the Congress shall complete action on a concurrent resolution on the budget for the fiscal year beginning on October 1 of such year.”42
This is an abdication of Congress’s first responsibility. Why doesn’t Senator Reid obey the law? Someone should be fired, you say. If the U.S. government were a private company, surely the CEO would fire the entire finance department for failing to come up with an annual budget plan. Of course, the federal government’s chief executive, Barack Obama, is in no position to enforce regular order when it comes to congressional budgeting and deficit spending. The Obama administration’s last budget blueprint actually proposed an additional $2.3 trillion in new spending on top of current red ink.43 There is no hope of adult supervision coming from the current resident at 1600 Pennsylvania Avenue when it comes to questions of fiscal discipline.
Adding insult to injury, the forced removal of We the People from the Russell Building that Thursday in November coincided with the inglorious collapse of the extraconstitutional “supercommittee,” a secretive, extremely powerful conclave of six Democrats and six Republicans that was created to come up with modest spending reductions. This was the legislative solution to public opposition to increasing the government’s authority to borrow still more, to “raise the debt ceiling,” in lieu of actually reducing the amount of deficit spending actually spent. This was the second debt-cutting commission created during the Obama administration in the hope of solving a problem that Congress and the White House have been unwilling to solve for years. Given the size of the problem, their agreed goal of $1.2 trillion in savings—or, to put it in terms of our “Uncle Sam’s personal budget,” their goal of a mere $120 a year, for ten years—was just a small haircut in projected new spending.
In the commonsense methodology you and I use to think about our family budgets, this sort of trim isn’
t a “cut” at all, but rather a decrease from a hoped-for rate of increase well beyond our means. This practice of calling anything below a rising baseline a “cut,” known as “current services” or “baseline” budgeting, is a fiction that makes it very difficult for taxpayers to even understand the budgeting that comes out of Washington. To put it less delicately, it’s a lie.
Lie or not, the supercommittee failed anyway. It could not even agree to noncut cuts. It could not even agree to reduce the rate of increase in expenditures of taxpayer monies that we do not have. Their inability to come up with even a nominal $1.2 trillion “cut” from an artificially bloated ten-year baseline was a new low, and the likelihood of any movement toward a balanced budget was put off yet again. That Monday, November 21, 2011, just four days after 250 American taxpayers were kicked out of the Russell Senate Office Building for committing serial acts of good citizenship and fiscal responsibility, the supercommittee members released this helpful statement:
After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline. Despite our inability to bridge the committee’s significant differences, we end this process united in our belief that the nation’s fiscal crisis must be addressed and that we cannot leave it for the next generation to solve. . . .
Most importantly, we want to thank the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task.44
Say what?
TAKE IT OVER
WELCOME TO BUSINESS AS USUAL IN OUR NATION’S CAPITAL: BEREFT of new ideas, poorly managed, failing to perform its most basic functions, and utterly contemptuous of anyone from outside the Beltway establishment who is armed with facts, better ideas, and a belief that America can and must do better. Every time Washington fails, wagons are circled and almost everyone colludes around the pretense that nothing’s really wrong: Everything is fine if we just let the process work its will—and by all means, we welcome your input.
