I & I Editorial BoardIt has been amusing to watch mainstream journalists (who’ve largely ignored the national debt crisis until it hit a nice round number of $40 trillion) try to explain how it’s all the fault of Middle East wars and tax cuts.
Somehow, the fact that federal spending has increased by nearly 300% over the past 25 years never enters the picture.
Instead, we get endless accounts about how President Donald Trump’s One Big Beautiful Bill Act will add $4 trillion to the national debt, and how previous tax cuts by Trump and George W. Bush are supposedly responsible for more than a third of the current debt.
The Wall Street Journal puts it this way: “Wars, the bursting of the dot-com bubble, and tax cuts sent budgets off course in the early 2000s.”
False. False. And False.
Wars: In 2001, the Defense Department accounted for 15.6% of federal spending. In 2015, it was 15.2%. This year, it will account for just 12.1%.
Dot-com bubble: Federal revenues did fall 11% after the bubble burst in 2000 and the economy went into a mild recession. But revenues reached a new peak in 2005.
Tax cuts: Federal revenues today are 159% higher than they were in 2000. They are on track to climb another 38% in the next five years.
So, no. None of those explain why national debt has gone from $5.67 trillion to $40 trillion since 2000, or why it’s doubled since 2017.
What does?
Well, take a look at the chart below. What do you see?
You will perhaps notice that over the past quarter century, tax revenues as a share of GDP have hovered right around 17.4% – which was the average from 1946 to 2000. All the Bush and Trump tax cuts did was keep revenues in that narrow range.
But look at spending. From 1946 to 2000, it averaged 19% of GDP. The last time there was a budget surplus, spending was below that long-term trend. Since then, it’s never been close.
And there were two massive increases in spending, thanks to Barack Obama’s failed “stimulus” and Joe Biden’s failed “rescue plan,” neither of which was needed and both of which were followed by sluggish growth.
In addition, both Obama and Biden expanded the entitlement state, which set the federal government on a permanently higher spending path. There were plenty of bipartisan spending splurges as well.
The result is that while revenues went up 159%, spending has gone up almost twice as fast.
To Democrats, this is just evidence that taxes are too low. But it would be impossible to raise taxes enough to pay for all this additional spending without crashing the economy, which would, in turn, suppress tax revenues and increase federal entitlement spending.
We got into this hole because politicians have been spending like there’s no tomorrow. The only way out of this hole is to cut spending. Or at least moderate its growth so spending as a share of GDP can return to its historic average.
That should be simple enough even for brain-dead corporate journalists to understand.
— Written by the I&I Editorial Board
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If history is any guide, it will take a national calamity or fiscal crisis before our Congress shows even remote interest in a balanced budget. Or, at least one that curbs a large part of the spending. One of the major problems now is that cutting some of the generous programs back or eliminating them altogether is very difficult, because some of our citizens have come to depend upon them.
There is nothing in the world that is so simple that fake-news media whores can understand it.
I just read today that around 30 states are requiring financial management classes. Seeing how the deficit and debt have grown we could have used those those kinds of mandated classes before. I have a strong feeling that kids, once they know how to manage money, will address the debt-as the baby boomers and those born after the baby boomers haven’t.
We all forgot the lessons of the Great Depression. We all were taken care and cosseted by too attentive parents . And we all failed the future generation who will have to address the budget.
Will they be able to do it? I don’t know, but if they do do it, the greatest generation (the ones who lived through the Great Depression and fought WWII) will have competition for the moniker “Greatest Generation.”
The end will come quickly if history is any guide, perhaps another Black Tuesday. Monster money markets’ debt run on trust that tomorrow’s dollar is about the same as tonight’s. When that bubble pops, as it must, full faith and credit vanishes and there is a run to save one’s self. No one knows where the bottom is. In olden days it varied, perhaps 1/2 of wealth evaporates, or zero. The Weimar Republic’s Papiermark, the Continental or the Confederate dollar comes to mind, a life savings bought a sandwich. All collapses involved mass killing, the last being the politicians.
“We got into this hole because politicians have been spending like there’s no tomorrow.”
It must get boring writing editorials just to confirm your priors all the time. A 2024 study by the Committee for a Responsible Federal Budget attributed the growth in debt as a share of GDP this century as follows:
* 37 percentage points of GDP: major tax cuts
* 33 points: major spending increases
* 28 points: responses to the Great Recession and COVID (e.g., checks for staying home)
So tax cuts have had a major role in aggravating the federal debt.
We saw that report, and others like it, then looked at the actual numbers (presented in those two charts) and came to our own conclusion.
40,000 Billion Dollars.
So when the “savings” of $17 Billion or
$250 Million in fraud is “found”
Put it into some focused perspective.
And then say:
“Look! Squirrel!”