Last week I actually thought that our federal elected leaders, including the president, would reach an agreement and not allow the sequester cuts to go into effect. As the week went by, no one blinked and voilá: those cuts totaling 2.4 percent of the year’s total spending began to take effect.
So, maybe those cuts were not that menacing after all. For all the hype that had been produced and all the gloom-and-doom forecasts, we have come to realize that maybe we can live without increasing our spending by that much more.
For the last few years, the federal government has spent 1 trillion dollars more than what it collects in taxes.
- Rosario Marin, Former U.S. Treasurer
First of all, there is a growing realization that as a country we are living beyond our means. So much so, that for the last few years the federal government has spent 1 trillion dollars more than what it collects in taxes. President Obama has officially added to our debt an astounding 6 trillion dollars in the four years he has been in charge of the U.S. finances. His average then has been an increase of 1.5 trillion dollars per year. For someone who castigated President Bush for adding 4 trillion dollars to the U.S. deficit in 8 years (average half a trillion a year) by calling him unpatriotic, I wonder what word he would use to describe himself after having added 6 trillion dollars in half that time.
Second, the so-called sequester cuts are only a reduction on the president’s proposed budget increases. Every year the budget is created with the assumption that government will grow. Consequently, an increase in spending is projected. This happens every year in Washington regardless of what the tax receipts are. What a novel idea it would be to have federal spending correspond to tax receipts. But because one is not dependent on the other, we have been operating at a deficit. To make up the difference, the U.S. prints money and/or borrows money (mainly from China). This continued borrowing creates another problem — the U.S. reaches its debt ceiling. By law Congress has to approve any increase in the limit of our national debt. Since the federal government constantly overspends, the president has to go back and ask for an increase in our debt limit. By now we have surpassed the 16 trillion debt mark. Current annual tax receipts are approximately $2.4 trillion a year. If this were your household budget, it would mean that your yearly income is $24,000 but you owe $160,000 in credit cards.
Third, the federal government has grown despite the fact that our economy hasn’t. Americans know first-hand that they have had to reduce their own consumption, so they are thinking the federal government should do so as well. It shouldn’t be shocking to the democrats and to the president that Americans did not fall for all the desperate scare tactics the government has employed. The claims that the world was going to end if the cuts were not averted did not and will not materialize.
Maybe, just maybe, we have been enlightened and will no longer fear the next time the government, or rather the president, cries wolf.
Rosario Marin was the 41st Treasurer of the United States and is co-chair of the American Competitiveness Alliance.