The 5 Reasons It’s Too Late to Fix America's Spending Before the Country Goes Over the Cliff
We can see the edge from here
Whether you are talking about a person or a nation, the longer a mistake goes on, the more difficult it becomes to fix it.
As one example of many, we could use, think of an alcoholic. They may start by getting drunk because it alleviates their anxiety and makes them feel better. It works, but a little too well. Soon they become hooked, but they manage to keep it relatively under control at first and may appear to be holding it together. Once it starts getting out of hand, their friends and family will try to help them break the habit and they may go to rehab, a therapist, or AA. But, after a few failed attempts to break their addiction, their old friends may stop coming around and even their family may give up on changing them. Next thing you know, they get a drunk driving charge, lose their job, and they have trouble affording a therapist or another stint in rehab. It drives their family, who can’t understand why they won’t quit drinking, even further away, so they make new friends, and somehow, all their activities tend to revolve around drinking. They’re broke all the time. They crash a car. They start having liver problems. They find a nice girl they really like and drive her away by acting like a terrible person when they’re drunk. When they try to quit now, they start having withdrawal symptoms. Life is worse than ever and what makes them feel better? Alcohol… sort of. They certainly don’t get the same buzz they used to get out of it, but it’s how they’ve gotten used to coping. Is it “too late” to address their alcoholism? No. Would their life be better if they did? Absolutely. But their addiction has also had permanent consequences that aren’t going to just be fixed by getting sober. Moreover, their addiction has left them in a much deeper hole than they were in when they started drinking to fix their problems. Still, it could be worse. Go walk through a city like New York or San Francisco and you’ll see plenty of homeless people who never got over their addiction to alcohol and now they live in an alley.
Believe it or not, America is deep into a similar process right now, although because we’re talking about a nation, not a person, it has been much slower. Unfortunately, just as alcoholism threatens the functionality and eventually the continued existence of a person that can’t stop drinking, our nation’s spending is making our country more dysfunctional and will ultimately make it much less likely that it will survive at all unless something changes dramatically. As you are about to see, the change we’d need to see is highly unlikely for a number of reasons.
1) We can’t contract our money supply enough: America used to be on the Gold Standard, but FDR started moving us off of it to make it easier to print our way out of the Depression and Richard Nixon finished the process in 1971. The Gold Standard was more of a mixed bag than most people realize, but it did at least have the virtue of pinning the amount of currency to a tangible asset with real-world worth. Over time, our money supply has become increasingly disconnected from any sort of real-world value that we could provide in trade for it. Imagine a millionaire who announces that he’s now worth five million dollars, not because of any investments he made, but because he just decided that’s what his net worth happens to be, and you have a pretty good idea of what the United States and much of the rest of the world has been doing over the last few decades. The problem with this policy historically is that it often temporarily leads to more prosperity, but long-term, it leads to financial ruin as people ultimately lose confidence in the value of government money. So, why not go back to the Gold Standard? Because we’ve printed so much Monopoly money that if we went back to only spending dollars that we could trade for assets like gold, the economy would massively contract because there would be much less cash to go around. Yes, we would no longer have to worry about the economy going down in a hyperinflationary Hindenburg one day, but the trade-off would be the country getting significantly poorer in the immediate future. Going back on the Gold Standard is superficially attractive, but the number of Americans who would willingly choose massive economic pain for the country NOW instead of suffering much worse at some unknown point in the future is going to be very small.
2) We’re too in love with big government: There are certainly people, me included, who talk about small government and the importance of our nation living within our means, but as a practical matter, there simply has been no significant constituency for small government in America since Newt Gingrich brilliantly managed to turn it into a serious issue in the early nineties. Liberals love nothing better than big government and when push comes to shove, even “small government” conservatives are generally only interested in nibbling away at the edges on spending. This is because there is no connection between what Americans pay in taxes and what they get in return for their money. How much sense does it make to ask someone if a policy is a good idea without them having any real understanding of what it costs? If you were asked if you’d like to eat a $70,000 pizza, you’d probably say, “sure.” If you were told you’d have to pay for it and were asked if you still wanted it, only a tiny fraction of the population would still be interested.
If you want to see what this kind of thinking leads to in practice, you can start by looking at this pie chart from the CBO that shows a breakdown of federal spending in 2020.
Now, look at these numbers from 2017 by Pew Research. As you do, it’s worth noting that over a trillion dollars of that 2020 spending was on programs designed to help Americans weather the coronavirus or perhaps more accurately, the economic damage caused by the government reaction to the coronavirus. That being said, we ran a deficit of more than 3 TRILLION dollars and roughly half of that chart is Social Security, Medicare, Medicaid, defense, and interest we owe on the debt.
When you start talking about cutting things like Medicare, Social Security, and defense, only 8 to 15% of REPUBLICANS want to make ANY CUTS in those programs. The problem with that is that unless we make MAJOR cuts to those programs, it’s going to be almost impossible to get spending under control. So, if cutting those programs is a dead dog political loser even with Republicans, what are the chances it’s ever going to get done prior to a crisis where we have no choice other than to do it? Exactly zero.