While the president and his sympathizers in the media are trying to convince us that we can close the gap between federal receipts and outlays by increasing taxes on guys like Buffett and Gates, political scholar and commentator Paul Kengor asks us to consider that the root of our problem may be on the spending side.
Malignant ideas about the role of government entered Washington a century ago through two "progressivist" presidents: Republican Teddy Roosevelt and Democrat Woodrow Wilson. Those ideas were entrenched in the economy by FDR's New Deal. But it wasn't until the launching of the mega experiment called the Great Society and the conscious application of the Keynesian idea of smoothing the fluctuations of the business cycle that our federal government started on a trajectory of uninterrupted and unsustainable growth.
Kengor notes that from 1901 to 1965, outlays had been decreased year-to-year nearly two dozen times. Starting with LBJ, each administration, Republican or Democrat, has spent more and more each year. As a result, each president has left a bigger debt to his successor despite the fact that each of them had managed to squeeze more money out of the citizens' pockets than his predecessor. (Even after Ronald Reagan reduced the highest marginal income tax rate from 70 to 28 percent, Internal Revenue Service data revealed that tax collections from the wealthy had increased.)
Before Johnson's Great Society, our deficit was $1.4 billion; today it is one thousand times larger. We can compare Washington's addiction to deficit spending to a fiscally illiterate head of household who borrows 40 cents of every dollar they spend on food, rent, gas, utilities, and medical bills. The guy even pays his taxes with credit, transferring the balance from one plastic card to another. Of course, no individual can play this Ponzi game for long without ending up in prison or a mental facility. Not only has Uncle Sam been playing it for decades, he's playing it with a gun in his hand.
Does that mean that conservative icon Ronald Reagan (recently hailed by the president as an apostle for social justice) is as guilty as George W. Bush or Barack Obama of growing the size of government? Yes and no. Reagan did set a bad example by raising the debt ceiling 18 times in eight years. But a recent publication by the American Legislative Exchange Council reminds us that "all debt is not created equal." The additional $2 trillion of debt during the 1980s achieved goals as praiseworthy as the ones achieved by debts incurred during WWI and WWII. It freed hundreds of millions of people like me from their socialist cages and it rebuilt an economy devastated by Keynesian stagflation.
As for today, imagine how much better off we could have been if, instead of accumulating more than a trillion dollars of new debt every year since 2008 from bailouts and "stimulus" spending, the government had made a credible long-term commitment to shrink its size and let businesses and households invest and spend all that cash.