Alongside family, community and faith, America’s success is rooted in human capital. By rewarding the risk of entrepreneurial spirit and advancing the cause of social mobility, American society has empowered individuals to make humanity happier, healthier and safer. Regrettably, today, U.S. capitalism is under attack from liberals who propose ever-expanding government. Consider Hillary Clinton’s recent defense of her proposal to increase spending by $1 trillion over 10 years. Describing her proposed spending as necessary investments in the middle class, Clinton claims her plans would benefit the economy. But it’s not just Clinton making these claims; it’s just about every liberal in America.
The claims are disingenuous in two ways. First, they fail in the realm of basic economics. Although liberals argue their profligacy represents effective investment, as opposed to investment in the private sector, government in fact has a weak record of allocating resources in an economically productive manner. Indeed, the main expenditure in Clinton’s spending plan — $350 billion on “college affordability” — has no obvious investment-productivity potential. Providing a primarily private benefit, college education costs should be an individual responsibility, not a public one. Adding these expenditures onto taxpayers thus represents an expansion of net-unproductive government spending and an embrace of socialism’s (repeatedly proven) delusion.
Second, liberal spending plans ignore the core driver of the budget deficit (and thus the expanding national debt): entitlements. Listening to Elizabeth Warren, Bernie Sanders and Hillary Clinton, you’d believe that Social Security and Medicare could be made solvent by simply taxing the rich a little more. This is a proven lie. Just read page 75 of the non-partisan Congressional Budget Office’s (CBO) latest report: “Projected deficits in CBO’s baseline remain about the same for the next several years but then increase as mandatory spending [entitlements] and interest payments rise while revenues remain essentially steady relative to gross domestic product.” CBO is clear: mandatory spending substantially outweighs revenues. CBO projections also show that deficit spending as a percentage of GDP will spiral out of control within the next few years. This will pummel America’s youngest and poorest citizens. After all, as I’ve explained, continued debt building deficit spending will lead to interest rate hikes and a significant increase in borrowing costs. But don’t take my word for it, just read the CBO’s latest findings on the four key problems this ballooning deficit poses:
“…high and rising debt would have serious negative consequences for the nation: When interest rates returned to more typical, higher levels, federal spending on interest payments would increase substantially. Because federal borrowing reduces national saving over time, the nation’s capital stock would ultimately be smaller, and productivity and total wages would be lower than they would be if the debt was smaller. Lawmakers would have less flexibility than otherwise to use tax and spending policies to respond to unexpected challenges. Continued growth in the debt might lead investors to doubt the government’s willingness or ability to pay its obligations, which would require the government to pay much higher interest rates on its borrowing.”
The CBO is warning America of the untruths that lie at the heart of today’s liberal spending plans. The idea that government redistribution from “the rich” to everyone else will solve all our problems is patently false. Even then, by raising taxes and degrading entrepreneurial incentives, those new developments to make our lives better — whether the Internet, the iPhone or the latest medical imaging device — will also be retarded. We should pay heed to examples like that of Greece. Over the long term, our continued deficit spending offers only a Macbeth-style waltz into oblivion.