This week, Congress passed a budget calling for increasing federal spending
and adding $1.7 trillion to the national debt over the next ten years. Most
so-called "fiscal conservatives" voted for this big-spending budget because
it allows Congress to repeal some parts of Obamacare via "reconciliation." As
important as it is to repeal Obamacare, it does not justify increasing spending
and debt.
It is disappointing, but not surprising, that the Obamacare repeal would be
used to justify increasing spending. Despite sequestration's minor (and largely
phony) spending cuts, federal spending has increased every year since Republicans
took control of the House of Representatives. Some will attribute this to the
fact that the Republican House had to negotiate with a big-spending Democratic
president — even though federal spending actually increased by a greater percentage
the last time Republicans controlled the White House and Congress than it did
under President Obama.
The history of massive spending increases under unified Republican control
of government is likely to repeat itself. During the presidential campaign,
President-elect Donald Trump came out against reducing spending on "entitlements."
He also called for a variety of spending increases, including spending one
trillion dollars on infrastructure.
One positive part of the infrastructure proposals is their use of tax credits
to encourage private sector investments. Hopefully this will be the first step
toward returning responsibility for building and maintaining our nation's infrastructure
to the private sector.
Unfortunately, the administration appears likely to support increased federal
spending on "shovel-ready" jobs. Claims that federal spending helps grow the
economy rely on the fallacy of that which is not seen. While everyone sees
the jobs and economic growth created by government infrastructure projects,
no one sees the greater number of jobs that could have been created had the
government not taken the resources out of the hands of private businesses,
investors, and entrepreneurs. Despite what some conservatives seem to think,
this fallacy applies equally to Republican and Democrat spending.
President-elect Trump has criticized the past two administrations' reckless
foreign policy, and he has publicly shamed the powerful Lockheed Martin company
for wasting taxpayer money. Yet, he continues to support increasing the military
budget and has called for increased military intervention in the Middle East.
The fact is the United States already spends too much on militarism. Not only
does the United States spend more on the military than the combined military
budgets of the next eight highest spending countries, but Pentagon waste exceeds
the total Russian military budget.
America can no longer afford to waste trillions of dollars on a militaristic
foreign policy. Donald Trump should follow-up his attacks on wasteful military
spending by dramatically changing our foreign policy and working to cut the
Pentagon's bloated budget.
If the new administration and Congress increase spending, they will need the
Federal Reserve to monetize the growing debt. The need for an accommodative
monetary policy gives the Federal Reserve and its allies in Congress and in
the deep state leverage over the administration. This leverage could be used,
for example, to pressure the administration to abandon support for the Audit
the Fed legislation.
Fed action can only delay the inevitable day of reckoning. Raising levels
of federal spending and debt will inevitably lead to a major economic crisis.
This crisis is likely to be reached when concerns over our national debt cause
more countries to reject the dollar's status as the world's reserve currency.
The only way to avoid this crisis is to stop increasing spending and instead
begin reducing spending on all aspects of the welfare-warfare state.
