Why Does the Government Think It’s Okay to Spend More Than It Earns?

The common belief is that the government disburses funds above its received revenues. However, the truth lies with Congress. This failure to manage fiscal discipline over the past 70 years is stark. Congress has been the primary driver of these deficits, with tax revenues averaging 17% of GDP and spending consistently at 19%.

Historical Context and Current Trends

Under President Biden, government spending surged to an unprecedented 24% of GDP, the highest figure in history. This excess has resulted in a critical issue: increased national debt of 35 trillion US dollars. The nation now adds approximately 1 trillion to the deficit every 100 days, significantly contributing to the growing debt.

Interest on the national debt is expected to surpass the defense budget and all social programs combined, making it a critical fiscal challenge. Harris has proposed further spending on giveaways, which is a misguided approach.

Motivation Behind Excessive Spending

Politicians prioritize winning votes over fiscal responsibility. They fund “pet projects” that lack genuine value but are crucial for securing votes. A prime example is student debt forgiveness, which directly enhances the chances of winning student and likely parental support. Such initiatives cost a significant amount and often lead to increased tuition fees.

The Legislative Process and Fiscal Accountability

The US government's spending dynamics revolve around the legislative process. Congress, comprising the legislative branch, approves the budget, determines tax rates, and authorizes the US Treasury to borrow money. Every dollar spent is introduced as an Appropriations Bill, requiring a majority vote by both the Senate and the House of Representatives.

Despite this system, Congress frequently runs significant deficits, largely due to members' attention continually being focused on re-election. Among 435 House members, 65 have served for 40 years or longer, and 4 are currently serving 20 years or more. In the Senate, 10 members have served for 40 or more years, and only a handful have served over 35 years.

The Impact of Continuous Re-election

Politicians' focus on re-election leads to a preoccupation with pleasing constituents, often at the expense of addressing the nation's long-term financial stability. This focus on re-election makes it difficult for lawmakers to make difficult budgetary decisions. Voting to spend money becomes the default position in Congress.

Moreover, raising taxes to cover excessive spending is not a viable solution because it is politically challenging, especially in a nation where taxation is already at a high level. To balance the Federal budget at current spending levels, the required tax increase would be substantial, significantly higher than the current estimates of 5.082 trillion dollars for the 2024 fiscal year.

In conclusion, congressional behavior is driven by the need to remain in power. This dynamic results in excessive spending, increased debt, and a lack of fiscal responsibility. Addressing these issues requires a renewed focus on long-term fiscal health and a commitment to sustainable economic practices.