The right political strategy for the 21st Century is less government, not more. However, every Democratic candidate running for president wants to create more government spending rather than less. Their policy positions for their various spending programs should nullify their political credibility because all of them are utterly bereft of financial numeracy.
The Numbers Tell Us The Whole Story
Let’s look at the numbers because the numbers tell us the whole story, and numbers (and facts) must rule, not magical thinking, regardless of the political party. I used the U.S. National Debt Clock as my source for this data; this website offers all of us a lesson in financial humility. The numbers are truly frightening, regardless of your numeracy skills. They demand a call to action.
1. The National Debt now stands at over $23 trillion and counting. If we project the national debt for 2024, the forecast totals $30 trillion.
2. At present, federal spending is $4.8 trillion (actual); this level will be over $5 trillion by 2024.
3. The current Federal deficit is $1.3 trillion (actual).
4. Expenditures for Medicare/Medicaid are more than $1.2 trillion; for Social Security, more than $1 trillion.
5. The ratio of U.S. Federal Debt to GDP was 53% in 1960 and has now doubled to 106% in 2020. By 2024, this ratio will be 122%.
6. Total unfunded liabilities for the Federal Government stand at $128 trillion. By 2024, these unfunded liabilities will increase to $165 trillion.
7. The ratio of U.S. Federal Spending to US GDP has risen from 3.18% in 1900 to almost 21% in 2020. By 2024, this ratio increases to 21.5%.
8. As a point of reference, world GDP in 2019 amounted to almost $86 trillion.
The order of magnitude of all these numbers should give all politicians pause because they certainly do me. Democrats and Republicans should look at these numbers and say whoa at the top of their lungs.
What Is to Be Done?
Economic strategy is not my expertise or forte. However, these three thoughts occur to me.
First, grow the economy as dramatically and as quickly as possible by continuing to eliminate as many unnecessary regulations and restrictions as possible. The Trump Administration has made a good start, but more needs to be done.
All business areas require reasonable regulations. However, not the nonsense exemplified by the Sarbanes-Oxley Act (2002), the Dodd-Frank Act (2010), or, for that matter, the Patient Protection and Affordable Care Act (2010), which is the most egregiously mistitled piece of legislation ever passed by the House and the Senate.
Second, critically review every department in the Federal Government from the largest to the smallest. Every department has to justify its continued existence and present a plan each year to downsize itself rationally over the next five years to reflect only its crucial mission or missions, even the Department of Defense. If the recent downsizing of the National Security Council provides any indication of what’s required, then we are confronted with a vastly bloated bureaucracy across the board in Washington, D.C.
Third, critically evaluate the public pension programs in the Federal Government, because they have become overly generous and are not sustainable. A similar judgment can be made regarding the public pension programs at the State level.
I would submit that the Federal Government could take many more actions to reduce Federal expenditures and the National Debt. However, the three I have outlined above offer significant results if the political will is there to undertake them.
The results of a no-action strategy or analysis paralysis at this time are too horrific to contemplate or imagine. We must take action.
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