Alexis de Tocqueville described America as the most magnificent habitation ever prepared by God for man. He did not exaggerate. Taking advantage of those resources, America has produced the most vibrant economy in history. No other country has the combination of bountiful natural resources, an educated and adaptive work force, numerous colleges and research institutions, a technologically advanced public, a history of innovation, free institutions, and the political stability that we enjoy.
As the richest nation and the only super power in the world, America should have balanced budgets, a surplus in the treasury, and properly funded entitlements. With sensible and courageous leadership in Washington, the country would have all three. But, instead, America has the largest national debt ever accumulated in history, an annual budget deficit of a billion dollars a year, and enormous unfunded entitlement liabilities.
Outside of Washington everyone knows that the current policies cannot be sustained and that drastic changes are needed. It should be apparent to all that the federal government, which has grown larger in recent years, is bloated and inefficient. The enormously complex federal tax code satisfies no one and should be simplified and reformed. The conditions demand austerity in Washington, but life goes on as if there is no problem.
In more than four years, the president has yet to pass a budget, eliminate a wasteful program, address the obvious need to reform Social Security before it goes bankrupt, or reform the tax code. Instead, he states that we do not have a spending problem. And to prove it, he has recently proposed yet another federal entitlement — pre-school education — even though no money is available to pay for it. In addressing the nation’s fiscal problems, he says he wants a balanced, fair approach, but when the Simpson-Bowles plan provided that approach, he ignored it.
To restore our fiscal system to health will require major surgery, including much pain and suffering by the American people. But thus far, both parties have offered only band-aids, and no one is talking about sacrificing now for improvements later. Rather than address the obvious fiscal problems by slashing salaries and eliminating departments and non-essential government programs, the president tours the country claiming that cutting 2.2 percent of the federal budget will have dire consequences. Of course the cuts he has chosen will have unfortunate consequences because he chose them to create maximum disruption.
To argue that every dollar in the federal budget is so essential that nothing can be cut is beyond absurd. The miniscule 2.2 percent cut could be accomplished without releasing any personnel, as Rand Paul has shown, by not replacing federal employees who retire, cutting travel budgets, and making federal salaries comparable to the private sector. And, even before any reductions have taken place, Obama has released hundreds of illegal immigrant criminals for lack of funding. Why not wait to see what funding is available or transport the criminals back to their native country instead of freeing them to prey on the American public?
Many commentators have observed similarities between America’s current conditions and the fall of Rome. Such comparisons have much validity, but 18th century France provides a better historical comparison. France was then the great power of Europe, and it had dominated Europe culturally for many years. In 1789, France — like America today — was a rich society with an impoverished government. Also like America, the upper class in the old regime of France received a disproportionate share of the nation’s wealth and the masses suffered.
The government of Louis XVI spent lavishly, as had his predecessors. Numerous finance ministers pointed out that the government had to balance its budget either by reducing expenses or increasing revenues. The only way to increase revenues was to tax the nobles. Lacking the courage to confront the powerful nobles or the desire to alter his profligate life style, the king did neither. He drifted along as long as he could. Finally, when the moneyed interests refused to lend the French government any more money, the whole system collapsed, inaugurating the French Revolution of 1789. Violence and chaos ensued, and the leaders, Louis XVI and Marie Antoinette, lost their heads in the Reign of Terror.
Already heavily in debt, the French budget in 1788, just before the collapse, had expenses of 629,000,000 livres and expected revenues of only 503,000,000 livres. Obama’s government is now spending roughly 35 percent more than it receives, a far greater deficit than France had when its government collapsed.
What will happen when inflation arrives and interest rates rise? How will the government be able to function? Soon a treasurer secretary will say to Obama what Calonne said to Louis XVI before the deluge: “Sire, in its present state, the country is impossible to govern.”
James Cook is a professor emeritus, retired from Georgia Highlands College, who writes occasional columns for the Rome News-Tribune.