Is the Federal Government On an Unsustainable Spending Spiral? PDF  | Print |  E-mail
Written by Steven Yates   
Thursday, 21 January 2010 10:00

debt clockA fairly famous quotation about the nature of democracy has made its rounds on the Internet. Many readers will be familiar with it. It comes in several variations. One goes like this:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years. Great nations rise and fall. The people go from bondage to spiritual truth to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, and from dependence back again to bondage."

The most common attribution is to a Scottish historian named Alexander Fraser Tytler, who lived and wrote a couple of centuries ago. No one has been able to find the quotation anywhere in Tytler’s known writings, however, and so now we label it apocryphal — one of those curious misattributions that circulates endlessly on the Internet, although one investigation has traced its usage to the early 1950s, well before there was an Internet, and even before that.

It is an interesting set of remarks, regardless of its origins! To what extent does its persistence reflect a deeply resonant truth we are obligated to pay attention to, if we are to understand our present predicament?

Federal spending — mostly in response to various groups’ perceived entitlements — is out of control, and under the present administration, is rapidly escalating. We often hear how we need to get deficits, the national debt, etc., under control. Crucial political realities stand square in the way.

The five biggest federal commitments at present are:  Social Security, Medicare, Medicaid, defense, and interest on the debt. All are going up, up, up, and there are no politically feasible ways to stop their escalation.

Voters themselves would never allow it. Seniors, for example, would never permit cuts in any of the first three. Witness the outcry against Medicare cuts in health care reform. Anyone in Congress attempting to cut any of the first three would be committing political suicide.

Can we cut defense spending? At first glance, this sounds more feasible, and there is surely an argument to be made against our needing troops stationed all over the world. But President Obama has just committed 100,000 more troops to Afghanistan. We are still deeply involved in Iraq, with no end in sight. In the wake of the recent terrorist near-incident over Detroit, we have heard saber-rattling against Yemen. Anyone floating the idea of cutting defense spending would face accusations of going soft in the so-called war on terror, and exposing the country to danger.

That leaves interest on the debt. Cutting here, too, is a no-go. It has to be paid if the U.S. is to continue to borrow — as it has to do at an ever-accelerating rate.

A Democratic Congress is not going to take the knife to departments like Education — or food stamps or unemployment insurance, especially during the worst recession since the 1930s.

So where is the federal government going to get the money to pay its ever-increasing expenditures? Tax hikes are out, for much the same reason as cuts in Social Security and Medicare are out. Someone would have to propose them, and that person or persons would be sent back to their local law offices when the voters finished with them. (Bush II’s tax cuts were massively popular, however ill-advised they were in the absence of spending cuts.)

This year’s projected deficit is $1.4 trillion, the highest in history. Most people cannot imagine $1.4 trillion!

What the government has been doing is creating money ex nihilo — out of nothing, as God is supposed to have created the world. The U.S. Treasury Department / Federal Reserve complex is not God, however, and as many economists conscious of the effects of inflating the currency have pointed out, continuing down that road indefinitely will mean the eventual destruction of the dollar. The only debating point is how long it will take, what crisis will precipitate the dollar’s fall into the oblivion of hyperinflation, and what the public will do when prices of basic foodstuffs and at the pumps suddenly go into the stratosphere.

Regrettably, most other economists are Keynesians who don’t see a long-term problem with huge deficits or the money creation spigot. (Keynes was supposed to have said, “In the long run, we are all dead.”)

A few will ask, is a default on the debt inevitable? The effects of such are hard to predict. Never has an economic system the size of ours defaulted on its obligations before. We are in uncharted waters here.

All of which brings us back to that apocryphal quote, and why it has proven so persistent in the online world. Voters continue to return to office those who promise them continued state-sponsored payouts, be these Social Security, Medicare, or what-have-you. The payouts must come from somewhere. Seniors will understandably say that they paid into Social Security all their working lives, and so are now entitled — but again, the number of those paying into the system is shrinking while the number of those taking out is increasing as the population ages. It has been known for years that our present Social Security system is not sustainable over the long run — the one that counts if our civilization is going to survive over the long run.

We have to wonder of what we think of as democracy even works in the long run, given human short-sightedness and self-interest. Many great philosophers, such as Plato, thought not.

When the quotation started circulating on the Internet, associated commentary often noted that we were at the stage of apathy becoming dependence. Under the present administration, the largest growth industry has clearly been government — especially at the federal level. If our money system collapses under the weight of its own commitments, we may find unfortunately that we have abruptly moved to that final stage: dependence having again become bondage.

Of course, much of the discussion of how to control federal spending, bring down the deficit, etc., is predicated on the assumption that those in the upper echelons of money and power really want to avoid an eventual financial meltdown in the United States. Maybe the time has come for a reality check!

Steven Yates earned his Ph.D. in philosophy in 1987. He is the author of one book, Civil Wrongs: What Went Wrong With Affirmative Action (San Francisco: ICS Press, 1994) and numerous articles both in academic journals and elsewhere. He has taught philosophy at Clemson University, Auburn University, Wofford College, the University of South Carolina, Southern Wesleyan University, Columbia, and Midlands Technical College, and has held fellowships with or worked on projects with the Institute for Humane Studies, the Heritage Foundation, the Heartland Institute, and the Acton Institute for Religion and Liberty.

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DDW
January 21, 2010
173.74.213.85
Votes: +5
Since we are not a democracy

But, rather, a Constitutional Republic, it would seem that a return to the Constitution as the law of the land, to say nothing of it's restraint of the fedgov, is in order. As the late W. Cleon Skousen clearly pointed out, all of our problems are a direct result of violating one or more parts of the Constitution. Is a return to that document now impossible?

1484
rprew
January 21, 2010
72.201.107.33
Votes: +5
Maybe the time has come for a reality check!

Ya think? The time for a reality check is probably a good 75 years overdue!

Is a default inevitable? If these shadows (size of government and spending outlays) remain unaltered by the future, then default is indeed inevitable.

(My apologies to Charles Dickens, socialist that he was.)

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