Voice From The Past Shape our Future

By Frank Giles|December 20, 2010

Ronald Reagan’s speech at the 1964 Republican Convention rings as though it could have been given just yesterday, only the numbers are massively different. He spoke of the conflict between our original intent and the course set by the New Deal and Great Society. “The (Founding Fathers) knew that governments don’t control things,” he said. “A government can’t control the economy without controlling people… They also knew, those Founding Fathers, that outside of its legitimate functions, government does nothing as well or as economically as the private sector of the economy.”

In the same speech, he lamented our national debt — which at the time was around $300 billion. Today, that figure is nearly $14 trillion. Ironically, it was about the time Reagan took office we saw the beginnings of the steep rise in our debt. Since then, Republicans and Democrats have both held power while the debt continued to grow. Today, the debt has nothing to do with political parties. It has everything to do with realizing we are on a path that is so very far from being sustainable it is laughable.

We can point the finger at government and blame it for our mountain of debt, but we are just as culpable. For years, we had our heads in the sand. But, over the past few years, the wild expansion of the debt has gotten our attention. In 2000, the debt was $5.6 trillion. We are closing in on tripling that figure in just this decade. If we stay on this path, assuming interest rates stay low, the debt will be $20 trillion by 2020.
There is the conventional wisdom it is good for a country to carry some level of debt. That may be true, but when the interest alone becomes unsustainable, it is time to wake up to the problem. In 2010, 42¢ of every dollar spent by the federal government will be borrowed. It costs us $39.1 billion per month to service our national debt, while the entire annual budget for the Department of Education is $46.8 billion.
In the last election, earmarks were all the rage and new blood was heading to Washington to clean the pork up. Frankly, earmarks are a joke claiming only $16 billion in spending in 2010 versus a deficit of $1.29 trillion. This year’s revenue is expected to be about $2.165 trillion. That will only cover our three largest programs: defense ($855 billion); social security ($715 billion); and medicare ($451 billion). Think about all the other stuff government does — that is all deficit spending. Imagine what happens when health care reform numbers begin to add to this in a couple of years. Most politicians are not brave enough to tell us this truth, so they make earmarks the villain.

Cuts in defense and entitlement programs are the only path to rein in our debt. That will require real sacrifices from all of us. The heady days of when national debt was just theory is over and there is no question this will impact your life and business. Manage you business and personal debt as closely as you can. Either we take our medicine now or face more serious consequences down the road.

So what has all this government spending gotten us? A postal service so broke that Saturday delivery will soon be cut. Social security and Medicare in a nose dive toward insolvency. An education system that ranks our children 25th in the world for math, etc.
Given this track record, you’d think lawmakers would see fit to shrink the size of government. But, they don’t, as Reagan said in 1964, “the more the plans fail, the more the planners plan.” He was right in 1964 and just as right today that we need a structural change in the way we govern and spend the people’s money.