The National Debt Shell Game

The looming “fiscal cliff,” “fiscal curve,” or whatever you want to call it is a red herring. In effect, all that it really does is provides filler for 24 hour news channels so that they do not have to bother reporting on real news. There is simply no way to make a few spending cuts here or there or to raise taxes in this tax bracket or that tax bracket in order to solve the debt crisis. Even if all discretionary spending – military spending and all spending other than mandatory spending – were cut completely, the United States would not balance the budget based upon the tax revenues that it currently receives. Furthermore, the amount of tax increases necessary to cover mandatory spending – Medicaid, Medicare, Social Security, Food Stamps, Unemployment, debt interest, tax credits, and student loans – would likely cripple an already hobbled economy and require even further increases in mandatory spending to cover even more needy Americans that would result.

The federal government is going to be forced to make tough choices – something that is has proven to be ineffective in doing. The entitlement system is going to have be radically overhauled. Social Security may have to be altered with means tests, higher retirement ages, and smaller payments or even eventually privatized like in Chile. Other “social safety net” programs such as Medicaid, Medicare, Unemployment, etc. – which are patently unconstitutional – may have to be transferred entirely to the states in line with the Tenth Amendment. Only a leaner and more “Constitution-sized” government is one that Americans will ever be able to afford to fund.

However, this is not to say that military spending and all other discretionary spending should not be cut wherever possible. If responsibility for entitlement programs were to be returned to the states in a Constitutional fashion, American taxpayers will require savings in federal taxes in order to pay for inevitable increases in state taxes. In particular, the Military-Industrial Complex can no longer be a sacred cow. If the nation were to return to the noninterventionist foreign policy of the Founders, then defense spending could easily be reduced significantly. Ending the Drug War, getting rid of federal regulations that are often expensive to enforce, and completely eliminating all nonessential and unconstitutional executive branch agencies would also save money.  Corporatist social welfare (which costs nearly $100 billion per year) must also be eliminated as well as counterproductive blowback inducing foreign aid (over $50 billion per year).  

Perhaps most importantly, the Federal Reserve must be abolished. The federal government must regain its constitutional control of the currency in order to allow free market forces to grow the economy.  Unless and until American leaders in Congress and the White House get real, the whole debate on taxes/spending and the debt is just a charade.