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A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz,
All democracies institute programs for current voters and shift the debt to future workers...even the unborn. Social Security, Medicare, prescriptions drug benefits for seniors are all prime examples of future debt burdens in America.Be Thankful: No Piddling Compromise
Recently, the Super Committee was unable to cut spending or raise tax revenues by $1.5 trillion in 10 years. Reviewing the alleged proposals by Democrats and Republicans, any compromise would have increased America’s debt and prolonged necessary spending reform. Be Thankful.
What would a serious President and Members of Congress do to reduce the dangerous debt? First, admit there is a problem. Obviously, President Obama and many Senators and Members of Congress find it difficult to state the obvious – all democracies have serious debt. European democracies have an acute debt crisis. In the United States, cities and counties have gone bankrupt. California, New York, Illinois, and New Jersey have debilitating debt. Yet, neither the President nor most Senators and Members of Congress admit the danger of America’s ever increasing debt.
Be Thankful that ordinary citizens, a.k.a. the Tea Partiers, have acknowledged the debt and its dangers.
Second, government elites must admit what is the root cause of the debt. Immorally, elected politicians buy votes today at the expense of future workers. Politicians give benefits to present voters, e.g., Social Security and Medicare, and stick the unpaid bills to future workers. This and similar schemes, e.g. public employee pensions, are the source of the dangerous debts of Europe and America.
Third, elected officials, as honorable and competent stewards of the nation’s economics, must seek guidance from intellectual and academic research. Particularly, research concerning other country's attempts to reduce their debt. In a blog last February, an America Enterprise Institute study was presented.
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 indicates 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 (i.e., Social Security and Medicare) and government wages, is more likely to succeed in reducing the public debt ratio than tax-based consolidation."
Obviously, the President and most Members of Congress are indifferent to academic research, especially research that does not comport with their ideological agenda. Again, Be Thankful for the Tea Party movement. FreedomWorks formed a Tea Party Debt Commission, which acknowledged the problem and followed the academic research by cutting spending.
The Tea Party Budget cuts $9.7 trillion in 10 years, balances the budget and does not raise taxes. Spending as a percentage of GDP will be 16 percent verses the current 24 percent. The national debt will be reduced. Some of the most important changes include: Tea Party Budget.
Be Thankful. Americans still have the freedom to criticize and petition government. The Tea Party Budget is a sober and sincere attempt to improve America. Be Hopeful that thousands of Americans will force the President, the Senate and Congress to embrace this Budget. Only the American people can force the politicians to make the critical and necessary changes.