07/30/2021 | News release | Distributed by Public on 07/30/2021 17:45
If you have ever attended the Nebraska Breakfast in Washington, you might remember the Fortenberry 'charts.' While they are not the most riveting conversation starter, they are my attempt to display graphs and statistics that communicate the massive, Byzantine federal budget in a digestible manner. I went off the charts for the last year owing to the postponement of the Nebraska Breakfast due to COVID.
The updated budget charts paint a rough picture. Back in 2012, the U.S. national deficit was $1.4 trillion. The hardships caused by the pandemic forced an understandably rapid and necessary increase in discretionary federal spending. The result is that the national deficit--the gap between spending and revenue--will exceed $3 trillion for the second year in a row, as our nation's national debt surpasses $28 trillion. If we had to pay off that national debt today, every man, woman, and child in America would have to fork over roughly $85,000.
A properly functioning government is important for the protection of our country, for orderly commerce, and for maintaining the guardrails of a flourishing civil society. These objectives require rightly ordered government spending. In the early part of each year, the President proposes a budget, initiating the Congressional budget process. The House and the Senate craft their own versions and attempt to harmonize differences. While there's a lot of talk about various policy initiatives, the Appropriations Committee on which I serve makes strategic decisions with the budget number to determine what programs are unnecessary and outmoded, and what programs need to be enhanced.
Here's the problem: this entire process has been hijacked, as the COVID pandemic set a precedent to jam through a proposed additional $3.5 trillion of government spending. As new COVID variants arise, many of you are justifiably anxious about your health, about the economy, and about worsening chaos in our culture. A massive increase in inflation due to massively increased government spending only deepens that insecurity.
In just the last month, inflation is up 5.4%. Gas prices are up 45.1%. Milk is up 5.6%. Fruit is up 7.3%. Washing machines are up 29.4%. The President's $6 trillion budget for fiscal 2022 will take the U.S. to its highest sustained levels of federal spending since World War II, generating even higher inflation and government borrowing to pay for the spending. Inflation plus interest on the debt is a hidden tax on the poor, and particularly hard-hitting to many of those on fixed incomes.
In response, a cavalcade of economists and pundits are trotted out on national media to argue that in an era of ultracheap borrowing, what matters is not the size of the federal debt, but how much the U.S. is paying each year to service that debt. With interest rates at historic lows, the argument goes, the times are ripe to massively increase federal spending on everything from infrastructure to childcare. Spending, deficits, and debt will rise, but interest expense will keep shrinking, making all the new outlays magically affordable. The Washington song remains the same: more money plus good intentions equal better outcomes.
Americans, whose expanded buying behavior is a central assumption of these rosy projections, are not buying the hype. Nine out of 10 respondents in a major national survey say they have noticed prices going up. Seven in 10 respondents said that major price increases will persist 'for an extended period.' Half of respondents say that if increases linger, they will pull back on household spending to compensate.
This softening consumer confidence undermines the entire growth premise of the proposed expansion of government spending. Which means further taxes to pay for it, less growth to compensate for it, and higher interest rates to offset inflation's rise. That translates into more pain at the pump, and in the grocery aisle--for you. The spending has gone off the charts.