The federal budget deficit now exceeds one trillion dollars on a yearly basis. The federal budget deficit was $2.7 trillion in the first nine months of fiscal year (FY) 2020 which is up $2 trillion dollars from the first nine months of FY 2019. Although tax revenues fell by 40% from April-June of 2020 in the same period spending rose by $1.5 trillion. This reckless spending needs to stop… It is a tax on the American people.
Many people, especially libertarians, agree that taxation is theft. The theory behind this is relatively straightforward. Theft is taking something from someone without their consent or by force. Taxation is taking money from the taxpayer with the threat of force as a penalty for non-payment. Deficit Spending is an immediate tax on those outside of the government sector of the economy and a delayed tax on everyone.
Typically, any person or business that continually outspends their income would understand that even if this helps them achieve goals in the short term, it will come back to bite them when they are unable to pay their creditors. The federal government operates above these laws of nature— or at least they believe they do.
“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default,” Former federal reserve chairman said in 2011 according to an article from USA today.
They do so at the expense of everyone except for a few government elites.
“And no other country can borrow quite like the United States, whose Treasury securities are in demand worldwide, largely because they are backed by the “full faith and credit” of the U.S. government, a global superpower with a powerful military,” Brent Schrotenboer writes in USA Today.
As Brent writes so it is— the endless spending is only enabled by the U.S. empire. Very few stand to benefit from this deficit spending. Those who benefit are the government elites who increase their power, the big banks who the fed lends the new money to, and the military contractors who maintain the empire.
But who pays for this deficit spending? Everyone does… now and in the future. There are two ways we pay for it.
- More government control- Many of those in government are constantly looking to increase their control over the economy and people’s lives. One subtle but sure way for them to do so is increased spending. By increasing spending, they increase the percentage of GDP which is government spending. There is a scarcity of time, labor, and resources. Every time the government spends a dollar, they intervene in the functions of the market and increase control.
- Taxes & Inflation- Total U.S. debt is larger than total U.S. GDP and grows exponentially every year. We pay for the growing debt with both direct taxes and inflation. The taxes may not come now, but they will certainly grow in the future especially as interest payments grow. Interest payments on the debt in 2019 totalled nearly $400 billion. This is 8.7% of all federal outlays, down from 15% in 1990 because other spending has risen even more (Pew Research). Inflation is a form of taxation as well. As the federal reserve prints more money, the value of your current dollar decreases. 50 years ago (June 1970) a basic basket of goods excluding food and energy would cost $40.80. In June 2020 the same goods would cost $266.06 or 552% more (St. Louis Fed).
The federal budget deficit continues to grow on a yearly basis, resulting in both increasing inflation and debt. Few benefit from this excess spending while future generations will pay a huge price for this reckless fiscal policy.