Federal, state and local debt hits post-WWII levels
Democracy and Power: 104 Future Debt Burden
A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz,
All democracies give benefits to current voters and shift the debt to future workers, even the unborn. Social Security, Medicare, prescriptions drug benefits for seniors are prime examples in America.
Federal, state and local debt hits post-WWII levels
Most Americans realize the federal government has dangerously increased the national debt. Increasingly more Americans are learning that state and local governments have also expanded their debt. Steve Mufson of the Washington Post reports:
Moreover, today state and municipal governments are also facing fiscal woes… State and municipal governments from Sacramento to Madison to Harrisburg have racked up about $2.4 trillion in debt, or more than 15 percent of GDP.
Even if analysts leave aside the debt held by the Social Security Trust Fund, the total indebtedness of federal, state and local governments is running around 85 percent…
Beware, the Social Security unfunded-liability is approximately $4 trillion depending on how far out it is calculated.
Comprehend, all of this debt – federal, state, and local – is caused by the intentional acts of federal, state and local politicians. Combined, these elected leaders have caused the greatest debt since World War II. This debt is the greatest threat to the American civilization.
This crisis can be rectified. An American Enterprise Institute (AEI) study, utilizing the groundbreaking work of Alberto Alesina and Silvia Ardagna of Harvard, found that major spending cuts are indispensable:
The data also clearly indicate that successful attempts to balance budgets rely almost entirely on reduced government expenditures, while unsuccessful ones rely heavily on tax increases.
The AEI study found reducing transfers/entitlements and government wages was also essential:
A 1996 International Monetary Fund study concluded that “fiscal consolidation that concentrates on the expenditure side, and especially on transfers and government wages, is more likely to succeed in reducing the public debt ratio than tax-based consolidation.”
Reducing government spending and restructuring social programs must occur, which will disrupt the work and lives of many Americans.
There is one more option. No, it is not raising taxes, which has failed in many countries. Niall Ferguson, in Newsweek, proposes the sale of non-essential government assets:
What can the U.S. federal government and the various bankrupt states put up for sale? No, not Yellowstone or Yosemite. Those natural wonders should always belong to the nation. …
In fact, the U.S. government currently has about $233 billion worth of nondefense “property, plant, and equipment,” according to the Treasury’s Financial Management Service. That is almost certainly an understatement. The government owns somewhere between 600 million and 700 million acres of land, or about 30 percent of the country’s land surface, much of it in the Western states, where as much as half the land is federally owned.
Washington could also sell its stakes in the Southeastern Power Administration and related assets as well as the Tennessee Valley Authority’s electric-power assets. There’s Amtrak (which runs at a loss) and the extensive hydroelectric empire of the U.S. Army Corps of Engineers.
Ferguson notes these government assets purchased by private entrepreneurs would be better managed, more productive and,of course, would reduce the debt.
When America’s supercilious politicians talk about everything being on the table, then we’ll start the responsible way of reducing the debt.
