Craig Dunn: Earl Landgrebe on the eve of U.S. bankruptcy
Friday, September 09, 2016 5:28 PM
KOKOMO – I hereby dedicate this column to former Indiana 2nd District U.S. Rep. Earl Landgrebe. Congressman Landgrebe immortalized the comment, “Don’t confuse me with the facts” during the Watergate hearings in 1974. His eloquent and timely use of this statement has been subliminally picked up and adopted by both major political parties as they go on their merry way to the bankrupting of our nation.
Of course, I could have dedicated this column just as easily to one of the great philosophers of my youth, Alfred E. Neuman. His monthly mantra, “What Me Worry?” closely reflects the fiscal discipline so ably practiced by our Congress and presidents for at least the last 50 years.
Our United States government is totally devoid of a single scintilla of synergy. We elect intelligent representatives and senators, put them in the same building and crank out more toxic waste than you’d find in the Love Canal. The root cause of this legislative morass is the giant sausage-making machine that we fondly refer to as democracy. The sum of our legislative parts just doesn’t add up to a positive number.
Please don’t get me wrong, I strongly believe that we have some brilliant, intensely dedicated public servants representing us in Washington, D.C. They know the issues perfectly well and could just as easily write this column. Even Democrat elected officials know a few simple truths and will admit to them when you get them away from the bright lights of the television news crews. In fact, just about anyone with a brain larger than an amoeba’s knows the mathematical fact that the United States, and the world for that matter, is swimming in a sea of debt that will destroy all that we hold dear, if nothing is done to change the trajectory of its growth.
As we quickly approach the end of another fiscal year for the United States, it might be enlightening to take a quick look at the budgetary highlights.
We are now looking at a national debt of $19.51 trillion. Even with record federal tax collections over the past 11 months, our 2016 fiscal year deficit is currently $580 billion and growing. According to The Kiplinger Letter, the federal budget deficit will amount to 3.2% of GDP for 2016, up from 2.5% last year. The total of publicly held debt as a percentage of GDP is at 76.6% this year and will grow unabated to at least 86% over the next 10 years. The national debt has grown from approximately $10 trillion to $19.5 trillion under President Obama. It previously doubled under President George W. Bush.
These numbers, as ugly as they are, belie the true depths of the debt problem. It may seem quite manageable for the United States to live with a $19 trillion debt when 10-year treasury notes yield 1.55% and 30-year treasury bonds yield 2.24%. In effect, we are almost financing our entire national debt with negative interest rates, when you factor in inflation. However, for those of you who weren’t alive or who weren’t awake during the late 1970s and early 1980s, let me take you for a short ride down memory lane.
In 1982, when I began my career as a financial consultant, treasury rates averaged 14.5%! Let me state that again, 14.5! Shorter term treasury rates skyrocketed even higher. No one in government anticipated that interest rates would explode to those levels, the same lack of foresight that missed the movement of current rates to their historically low levels.
Picture a federal government that has nearly $20 trillion in debt, that sees Congress fighting bitter budget battles over a billion here or a billion there, dealing with the effects of increasing interest rates in the future. Here’s a little mathematical factoid to help you understand the potential problem: For every rise of 1% in interest rates, the cost of interest payments on our national debt rises $200 billion per year. How will the United States pay for that increase in interest? By cutting spending? By increasing taxes? Come on and get real. Uncle Sam will just go back to the well and print up another $200 billion in paper currency and let the consequences fall to the economy and the American people.
We are now less than 60 days to Election Day and neither major party candidate for president is discussing the looming debt crisis. In fact, both Hillary Clinton and Donald Trump lean toward increasing our budget deficits in a Keynesian scheme to stimulate the moribund economy. They point to increased economic growth as providing the new tax revenues that will help close the burgeoning budget deficit. Good luck with that! Remember the $800 billion Obama stimulus? Cue Tennessee Ernie Ford, “800 billion and what did you get? Another year older and deeper in debt!”
I would like to see an honest discussion of our debt problem take center stage during this election season. The first presidential debate should begin with these questions in this order:
Do you agree that the growth of our national debt will eventually destroy our economy? If not, why not?
At what level of debt will our country go beyond the tipping point? What specific plans do you have to depress the trajectory of the growth of the national debt?
Do you plan on spending increases of any kind during your administration? Do you plan on increasing or decreasing taxes during your administration?
What will you tell your grandchildren about why their future has been destroyed by the deficit spending done by your generation?
I’m no political fool. I know that these questions won’t be asked and if they were, they wouldn’t be answered. And yet, only a focused honest discussion of this issue will ever lead to any meaningful solution. And therein lies the rub. It is my opinion that no one really wants to have an honest discussion on our debt problems.
Everyone knows that the only way to deal with debt is either to increase your income or cut your expenses. In governmental terms, increasing income means increasing taxes, and cutting expenses means spending less on federal programs. Both options send shivers up the spines of politicos of all persuasions. Discussing the solution to our budget deficits is political suicide, plain and simple.
You know and I know that this spending spree on our grandchildren’s credit card cannot go on forever. A mighty day of reckoning will arrive sooner than we might expect. The choice is ours about whether we will proactively work on the problem or whether we will be forced to reactively address the issue. What’s your bet?
We’ll see finger-pointing, name-calling and wild accusations thrown around during the presidential debates. We’ll see some entertaining political mud-wrestling to be sure, but I don’t expect to see any serious discussion about our debt. It’s like telling your spouse that you are going to cut up the family credit card right as you sit down for Thanksgiving dinner. Everyone gets a case of indigestion.
Dunn is chairman of the Howard County Republican Party.