Fiscal Irresponsibility

Even before the recent meltdown in the financial markets, one of the most serious threats faced by the country was the fiscal irresponsibility of our federal government.   Both parties are to blame.   When the Republicans controlled both houses of Congress, they were as irresponsible as the Democrats.   President Bush has been ineffective as a leader in controlling government spending.   According to The Wall Street Journal, federal spending has increased by almost $1.2 trillion, or 57%, in this decade alone. 

The spending splurge is continuing even in the midst of a financial crisis.   The New York Times reported last Friday as follows:  “As Congress tried to cobble together a plan to spend huge sums on a financial bailout, lawmakers also moved Thursday toward final approval of an omnibus spending bill with more than 2,300 pet projects, including a $2 million study of animal hibernation…  Taxpayers for Common Sense, a budget watchdog group, calculates that earmarks account for $6.6 billion of the omnibus bill’s cost, which totals more than $630 billion.”    Just yesterday, in order to attract votes for the $700 billion bailout package currently under consideration, the Senate added $150 billion of “sweeteners” consisting of tax breaks for special interests.  

The federal government’s spending splurge is being financed by borrowed money that will have to be repaid by our children and grandchildren.  This is reckless and immoral, just as it would be reckless and immoral for me to borrow money to finance an extravagant lifestyle with knowledge that my children and grandchildren would have to repay my debts following my death.   

Despite the obvious need to reduce federal spending, both McCain and Obama, in an effort to get elected, have promised new government programs that will cost billions of dollars.   According to the Committee for a Responsible Federal Budget, Obama during his speech at the Democratic Convention proposed $547 billion in annual spending increases and tax cuts, and McCain during his speech at the Republican Convention proposed between $524 billion and $563 billion in annual spending increases and tax cuts.  Both candidates are promising to pay for their new programs by cutting government spending in other areas and closing tax loopholes.  Both candidates, however, have been vague about how they would do this.    Based on my observations, it is very rare for politicians to eliminate a government program, even if the program is ineffective and has outlived its usefulness. 

In my opinion, both McCain and Obama are failing to be honest with the American people regarding our ability to pay for new government programs on top of existing entitlement programs that are growing at an unsustainable rate.   The national debt will soon exceed $11 trillion.   On top of that, the Heritage Foundation recently issued a report stating that the federal government’s liability for unfunded retiree benefits is $40.9 trillion, including $34.1 for unfunded Medicare benefits and $6.8 trillion for unfunded Social Security benefits.   In recent weeks, according to The Heritage Foundation, the government has obligated the taxpayers to incur $840 billion in liabilities for financial bailouts, assuming Congress this week approves the $700 billion bailout package currently being debated.     

Under these circumstances, how do you choose between McCain and Obama, both whom are trying to buy your vote by promising new government programs and both of whom are trying to convince you they will be fiscally responsible and will cut government spending?   The only way I know is to examine the records of the two candidates in an effort to determine which one has demonstrated the most fiscal responsibility in the past.  In my experience, the best way to determine how someone will behave in the future is to examine his or her past behavior.  Most people don’t change. 

Despite his unrealistic campaign promises, McCain has a strong track record as a fiscal conservative.     He is one of the few members of the U.S. Senate who does not request earmarks, and he has promised to veto any bill containing an earmark.   Unlike McCain, Obama is not bashful about requesting earmarks.   According to media reports, Obama has requested earmarks valued at either $860 million or $938 million during his first three years in the Senate, a rate of approximately $1 million per day in earmark requests.   Many politicians justify earmarks by saying they represent a small percentage of total government spending, which is true.   Using this rationale, you can justify almost any new project at any cost.  Earmarks are a symbol of the larger problem with irresponsible government spending.  Politicians use earmarks to buy votes with other people’s money.    The other people are the taxpayers, including you and me and our children and grandchildren.    

The Council for Citizens Against Government Waste (“CCAGW”) examines the voting records of members of Congress to separate taxpayer advocates in Congress from those who favor wasteful programs and pork-barrel spending.  CCAGW has given McCain a score of 100% for 2007 and a lifetime score of 88%.   By comparison, Obama received a score of 10% for 2007 and a lifetime score of 18%.    There may not be much difference in the campaign promises being made by McCain and Obama, but there is a significant difference in their voting records on matters involving the expenditure of taxpayer money.    

Now let’s consider what happens if Obama gets elected and if the Democrats retain control of both houses of Congress, which is highly likely.   CCAGW gave the Democrats in both the Senate and the House a score of 5% based on their votes in 2007 compared with a score of 67% for Republicans in the Senate and 60% for Republicans in the House.    The scores for the Republicans are less than impressive, but the scores for the Democrats are downright frightening.  

If Obama is elected, and if the Democrats continue to control both houses of Congress, then it is a virtual certainty that government spending will continue to increase at an accelerated rate.   If McCain is elected, I think he will at least make an effort to apply the brakes to government spending.     I am not optimistic either way, but I know one thing for sure:  if our elected officials do not control government spending, then the future for our children and grandchildren will be bleak.  If you think we can tax our way out of this mess, please contact me.  I have a bridge I would like to sell you.