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August 2013 Brief: Volume 20, Number 24

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The National Debt and the Future of the Republic

 

by John Hendrickson

 

 

The national debt continues to be a significant source of concern in an economy that is slowly gaining ground after the shock of the Great Recession. Government spending continues to spiral out of control, especially in recent years. During President Barack Obama’s first term “the federal debt rose by $6 trillion.”[1] The national debt is currently over $17 trillion and this does not include the looming unfunded entitlement costs of Social Security, Medicare, and Medicaid. The $17 trillion debt is a warning for policymakers to take seriously — and reverse the current course of government spending. Reducing the debt by cutting government spending is not only prudent fiscal policy, but it will lead to economic growth. The welfare and regulatory states have reached a zenith, and it is paramount that the United States return back to the principles of limited constitutional government. An escalating and uncontrollable debt will only lead to continual dismal economic growth and threaten the economic stability of the nation.

 

The estimate that the deficit will be around $759 billion in 2013 has unfortunately resulted in calls that the federal government is finally tightening its money belt and the fiscal crisis is under control. Although a smaller deficit is better than the annual trillion-dollar deficits that the federal government was running previously, it still demonstrates that spending is a major problem. Ed Feulner, who recently retired as President of The Heritage Foundation, wrote that “our government still carries a huge load of debt, and this latest improvement certainly won’t last. In fact, absent real reform, it’s set to get much worse.”[2] In other words the status quo will not solve the fiscal crisis, and with an escalating debt the “government has no choice but to pay more and more of our tax dollars just to cover the interest on it.”[3]

 

The fiscal outlook gets even worse when the unfunded mandates from entitlement programs are taken into consideration. As Jagadeesh Gokhale, a Senior Fellow at Cato Institute, wrote:

 

The official federal debt of $17 trillion is only a small fraction of the government’s true indebtedness: It includes only outstanding U.S. Treasury securities on which contractual future payments are due. But the government ‘owes’ future payments to millions of additional individuals — those who will become eligible for Social Security, Medicare, unemployment, disability, food stamps, and other government entitlement and welfare programs. And the government ‘forgoes’ tax collections from millions of others through tax preference programs, for example, for those with children, business expenses, low earnings, participants in qualified retirement saving programs, and home mortgage borrowers.[4]

 

“At $66 trillion, Social Security and Medicare contribute more than 70 percent to total federal indebtedness of $91 trillion,” noted Gokhale.[5] The Patient Protection and Affordable Care Act also will add additional burdens to the national debt. The rising costs of entitlement programs have resulted in the welfare state reaching the high-water mark, and if continued, will result in massive problems for the nation.

 

Slow economic growth is another reason why the national debt is a serious threat. The economy continues to struggle with high unemployment, a record number of people needing some form of government assistance, and policy uncertainty. Policies such as uncontrolled government spending, increasing regulations, the Affordable Care Act, quantitative easing by the Federal Reserve, and higher tax rates are all major sources of uncertainty in the economy.

 

Donald J. Devine, a veteran of President Ronald Reagan’s administration and a leading conservative scholar, recently wrote that “the past several years have been dispiriting for Americans. Economic stagnation, moral exhaustion, and looming bankruptcy have become hallmarks of our time.”[6] The moral and economic decline in the United States is a serious issue, and the national debt is a leading factor in threatening the future of American civilization.

 

Richard W. Rahn, a Senior Fellow at Cato Institute, wrote that if “governments substantially reduced spending, cut high marginal tax rates and eliminated counterproductive regulations, their economies would rise above the stall speed and the debt growth rate and employment problems would diminish.”[7] Rahn’s description is the economic blueprint for policymakers to follow, but cutting government spending is not an easy process.

 

The nation is still wedded to the New Deal-style welfare state, and as Devine wrote, “welfare-state progressivism has so corrupted modern political thinking that it has obscured the secret of America’s success: the U.S. Constitution’s capacity to harmonize the twin ideals of freedom and tradition.”[8] Which brings us to the heart of the problem, and that is America’s neglect of constitutional principles that has resulted in this current national decline. If the nation is to reverse the current state of economic and cultural decline the citizenry must return back to the constitutional principles that established our republic. Conservatives must adhere to and fight for constitutional principles, and conservatives must look to history and apply the truths of the American Founding to the policy problems of today.[9]

 

Endnotes:
[1] Larry Kudlow, “Without deep spending cuts, Republicans lose House in 2014,” National Review Online, January 18, 2013, <http://www.nationalreview.com/articles/338105/without-deep-spending-cuts-republicans-lose-house-2014-larry-kudlow> accessed on July 9, 2013.
[2] Edwin J. Feulner, “No reason for a victory lap over the debt,” The Heritage Foundation, June 26, 2013, <http://www.heritage.org/research/commentary/2013/6/no-reason-for-a-victory-lap-over-the-debt> accessed on July 9, 2013.
[3] Ibid.
[4] Jagadeesh Gokhale, “The U.S. in the red: How are we doing?” Cato Institute, June 24, 2013, <http://www.cato.org/publications/commentary/us-red-how-are-we-doing-structural-imbalances-threaten-our-economic-freedom> accessed on July 9, 2013.
[5] Ibid.
[6] Donald J. Devine, America’s Way Back: Reclaiming Freedom, Tradition, and Constitution, ISI Books, Wilmington, Delaware, 2013, p. 1.
[7] Richard W. Rahn, “Approaching economic stall speed,” The Washington Times, July 9, 2013, <http://www.washingtontimes.com/news/2013/jul/9/approaching-economic-stall-speed/> accessed on July 9, 2013.
[8] Devine, pp. 1-2.
[9] John Hendrickson, “The Mount Vernon Statement,” Institute Brief, 17-11, Public Interest Institute, April 2010, <http://www.limitedgovernment.org/publications/pubs/briefs/pdfs/brf17-11.pdf> accessed on July 9, 2013.

 

John Hendrickson is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact him at Public.Interest.Institute@LimitedGovernment.org.

 

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