At a town hall meeting in Greeley, Colo. last Saturday, Sen. Michael Bennet (D-CO) said plainly what’s been on Americans’ minds for months now: we’re $13 trillion in debt and “have nothing to show for it.” Sen. Bennet also pointed out this record spending has done nothing to create new jobs.
A new Reuters poll shows Sen. Bennet’s concern is, politically-speaking, right on target. Reuters explains, “Unemployment and government spending topped voters’ economic concerns, with 72 percent and 67 percent of respondents saying they were very worried over those issues respectively.”
According to the Associated Press, 54% of adults are “very” worried about the effect the federal debt will have on their children’s and grandchildren’s financial future; 26% are “somewhat” worried; 10% are “not too” worried; and 9% are “not at all” worried.
Each week, the Economist asks Americans what they think is the most important issue facing the country.
According to the Associated Press, 45% said they would continue all of the tax cuts; 38% said they would continue only those for households earning less than $250,000 a year; and only 14% said they would let the all of the tax cuts expire.
An opinion piece in Forbes by Brian S. Wesbury and Robert Stein asks an important question: when is government spending necessary, and when is it not?
The two write: “Up to a point, some government spending is good. Defending the nation and the rule of law, and helping create some national efficiencies are positive additions to growth.”
They’re right: there are some things the federal government, and surely the state governments, must provide.
But the two caution, “[T]he U.S. is past that point.”
We’d say we’re way past that point. Our current spending trajectory is simply unsustainable. The U.S. is more than $13.3 trillion in debt. (See Public Notice’s fact sheet on irresponsible governing.) Taxpayers pay interest on that debt just like homeowners pay interest on their mortgage. That interest alone, when adjusted for inflation, will nearly triple from $221 billion to $637 billion between 2011 and 2020. (See Public Notice’s fact sheet on unsustainable spending.)
Furthermore, this spending is not helping the economy. Wesbury and Stein turn north to make this point. Our neighbors in Canada have been cutting spending and taxes for some time. Their unemployment rate, while still high by U.S. historical standards, is 1.5 percentage points lower than the current U.S. rate of 9.5 percent.
Here’s a look at some of this week’s most interesting, and consequential, budget- and economy-related issues in the 50 states:
Last week, an article in the Philadelphia Daily Newslamented that stimulus money awarded to Philadelphia has not been very stimulating; unemployment remains high and it has not able to use the money to help its budget problems.
In an editorial last week, the Las Vegas Review Journalpointed out that when government can’t pay its bills, it borrows more money. A business, however, can’t “put payroll on a credit card for long before inviting bankruptcy.”
According to an article in the Cincinnati Enquirer, Ohio Governor Ted Strickland “said he’s disappointed” that money from the stimulus package went to a company that outsourced work to an overseas call center.
On Monday, the Virginian Pilotreported that taxpayers paid $60 million for a railway in Portsmouth, VA that was completed in December. Seven months after its completion, the track has yet to see a train.
The Indianapolis Starpublished an editorial this week saying the U.S. government can take steps to reduce its debt load now or be forced to “to take much more drastic and painful steps in coming decades.”
The Philadelphia Inquirermade the case for passage of the $26 billion state aid package saying it will help Pennsylvania and other states avoid deeper cuts in services and layoffs.
“According to a study by the Brookings institution, Washington D.C. has the highest concentration of smart people in the United States. Lets see; we have a mess in the Gulf, we have a dysfunctional Homeland Security, and we are $13 trillion in debt. Imagine how bad it would be if these people weren’t geniuses.” — Jay Leno
The credit agency Moody’s just downgraded Ireland’s credit rating, citing weak prospects for economic growth and increasing debt levels. This is sad news for a nation once thought to be a bastion of good fiscal policy.
We’ve seen in Greece what happens when a country’s debt levels rise and credit rating falls: Investors start demanding higher interest rates because they fear that the country may default. That means the country faces higher interest payments, and those higher interest payments mean a worse budget crunch and even high deficits. It’s a vicious cycle that doesn’t end well.
Moody’s warned in March that it would have to consider lowering the United States credit rating if we don’t get our debt under control. We need to take action now so that we don’t follow Greece’s—or now Ireland’s—path.
USA Today has an interactive graph today showing the growth of U.S. and international debt since 1943. In the last 30 years, debt-per-American has increased from $10,210 to $38,655. However, the trend line in the last four years might be the most astonishing thing on the page.
Viewers can compare debt-as-a-percentage-of-GDP between several countries. Greece’s ratio still far outpaces the U.S.’s, but both have moved up in recent years.
Pew and The National Journalasked adults how U.S. states should deal with their budget deficits. 43% favored cutting funding on transportation and road maintenance; 27% favored cutting funding on health services; 25% favored cutting spending on public safety; 22% favored cutting K-12 spending; and 39% favored raising taxes.
According to a Gallup/USA Today poll, 53% of adults think the government is doing too much. Only 39% think the government should be doing more.
Kaiser asked a pool of registered voters how important various issues were to their vote in this fall’s elections. 44% said a candidate’s stance on the budget deficit was “extremely” important; 35% said “very” important.
The June jobs report shows yet another sobering month of stubbornly high unemployment.
The jobless recovery has many public opinion polls showing “jobs and unemployment” as Americans’ top concern. Other polls are beginning to find “federal debt” is most worrisome to the public.
It’s no wonder why: since the stimulus was passed, unemployment has gone from 13 to 15 million, and government spending has created a debt close to the size of our entire economy.
We know of a way to help halt the growth of debt AND create jobs. Just follow the 5 easy steps outlined in the video.
Step 6 (if there was a Step 6): send this video to your friends, family and co-workers before government policy bankrupts our country.
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In their monthly meeting, members of the Admistration’s Fiscal Commission acknowledged real spending cuts must be made to tackle our nation’s growing fiscal crisis. Key quotes:
Commission Co-Chair Erskine Bowles:
“We are really going to have to reduce discretionary spending. There’s no way around it, and I think we ought to be very specific about how we’re going to address that.”
Chris Edwards, Director of Tax Policy Studies at the Cato Institute said the following in his testimony:
“Unless today’s massive deficit spending is reduced, the nation is headed for a fiscal calamity. The freedom and prosperity of young people will be crushed by debt piling up at over $1 trillion a year.”
Congressisonal Budget Office Director Douglas Elmendorf:, who also testified at the hearing, said:
“If debt grows unchecked. It means declines in people’s standard of living.”
Veronique de Rugy, Senior Research Fellow Mercatus Center at George Mason University, said:
“All parts of the budget must be on the table for review and potential cuts. Failure to do so will jeopardize the goal of addressing our fiscal problems.”
