In today’s political landscape, the desire for unchecked spending is a prominent concern. Politicians seem endlessly eager to allocate funds for various projects, often funded by borrowing. With every new program comes the expectation of support, leading representatives to chase votes by promising financial aid to their constituents. Unfortunately, this can create a cycle where voters expect something for nothing, perpetuating the illusion of economic sustainability.
The ongoing debates about the fiscal cliff illustrate this point. Much of the discourse centers on tax hikes and who will bear the burden rather than addressing the more pressing issue of necessary spending cuts. Currently, federal spending stands at 25 percent of GDP, a level reminiscent of the 1990s when it was more appropriately reduced to 18 percent. Yet, even this figure might be excessive. Why not aim for a more modest target, such as 5 percent of GDP? Streamlining government could drastically reduce paperwork and inefficiency.
The crux of the issue lies in government spending itself. Raising taxes is not a viable solution; the reality is that there are not enough taxpayers to cover a staggering $1.1 trillion deficit.
Unrealistic Promises
Politicians have made commitments to provide benefits to a wide range of constituents, often financed by borrowing from foreign investors and the Federal Reserve’s digital currency. This has led to a significant challenge as many citizens have come to anticipate a steady stream of government funds, despite its unsustainability. Nearly half of American households now rely on government assistance for their basic needs.
While some individuals depend directly on government aid, others, including contractors, agency personnel, and legal professionals, rely on continued government spending for their livelihoods. These groups have a vested interest in maintaining an unsustainable system.
There are also those advocates who demand government involvement in charitable work, insisting that public funds should support causes they believe in. The mere thought of budget cuts sends some individuals into frenzies, as illustrated by protests against potential cuts to AIDS programs, demonstrating the extent of their reliance on government support.
However, it’s questionable whether government should even be involved in such initiatives. If the focus were to shift from mere emotional responses to reasoned debate, more constructive arguments could arise without resorting to drastic demonstrations.
The Hard Truth of Financial Reality
The broader issue stems from a lack of critical thinking amongst the populace. Despite clear evidence of financial mismanagement—such as consistent trillion-dollar deficits—there remains a belief that prosperity can be achieved through increased public spending, even when the economy can’t sustain it.
Congress continues to act as though everything is under control. They push the narrative that with a few minor adjustments, economic stability will return, and challenges like Social Security and Medicare will resolve themselves. But this perspective is fundamentally misguided. It’s a fanciful notion that stands in stark contrast to mathematical realities.
Currently, the government borrows over a trillion dollars annually to fund operations and stimulate the economy, primarily from the Federal Reserve, which creates money from thin air. This scenario leads to an ever-growing debt while economic growth stagnates. Can anyone else recognize the inherent flaw in this approach?
Countless individuals depend on this unstable system, often unaware of the potential disaster looming on the horizon. Even Congress seems largely oblivious. But a rude awakening is imminent for all involved.
Sincerely,
MN Gordon
for Economic Prism
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