The Great American Spending Spree

Free money for everyone!
From the December 2005 Trumpet Print Edition

The United States of America is in the midst of an unprecedented spending spree. Yet, in comments made about the federal budget he submitted to Congress in February, President Bush told a group of U.S. governors, “I presented a good, lean budget to the Congress—it sets priorities, it meets priorities. It … says, if a program isn’t working, don’t fund it; or if it duplicates efforts, streamline” (February 28).

The truth is exactly the opposite. The $2.57 trillion spending plan was America’s biggest ever—about $330 billion more than would be generated by tax revenue. How anyone can describe a $330 billion deficit as a lean budget is beyond me.

And if you think the emergency relief the government has now ponied up to repair the wreckage from three devastating hurricanes will jolt the government into curbing its federal spending, think again.

Unanswered Questions

President Bush said rebuilding the Gulf Coast after Katrina would be “one of the largest reconstruction efforts the world has ever seen.” Criticized by the liberal media for not responding to tragedy fast enough, the president seemed to be making up for lost time by sending cash—lots of it. “Federal funds will cover the great majority of the costs of repairing public infrastructure in the disaster zone, from roads and bridges to schools and water systems. Our goal is to get the work done quickly” (September 15). But in the rush to throw blank checks at the rebuilding project, a number of critical questions were barely considered.

For example, what exactly is the federal government’s role in rebuilding entire communities or cities after natural disasters? As Stephen Moore wrote for OpinionJournal.com, “Chicago was burned to the ground in 1871; San Francisco was leveled by an earthquake in 1906; and in 1900 Galveston, Texas, was razed by a hurricane even more ferocious than Katrina. In each instance, these proud cities were rebuilt rapidly and to even greater glory—with hardly any federal money” (September 19). Of course, a lot has changed since those disasters. Today we live in the era of big government and ever-expanding entitlement programs. If something bad happens, welfare recipients simply expect the government to take care of it—plain and simple.

Another question that has been shoved aside is, how can we make sure the free flow of money into places like New Orleans will be spent wisely? When you hear commentators talk about the history of political corruption at the state and local levels in Louisiana, it is almost accepted as part of the region’s cultural charm. The Washington Post even labeled Louisianan police forces as “famously corrupt.” Last year, the head agent at the fbi’s New Orleans bureau described the corruption among Louisiana’s local and state officials as “epidemic, endemic and entrenched,” saying that “no branch of government is exempt.” According to OpinionJournal’s John Fund, the number of Louisiana state elected officials per capita convicted of crimes is the third highest of any state in America (September 26). Of course, the mainstream media are much too fixated on exposing President Bush’s faults to give any serious attention to state and local officials stealing or wasting billions of dollars. As columnist Peggy Noonan rightly asked, “How much of the $100 billion coming its way is going to fall off the table? Half? OK, let’s not get carried away. More than half” (September 22).

In the same speech where President Bush promised truckloads of money for the Gulf Coast states, he referred to the “persistent poverty” all of us witnessed on television during the New Orleans flood. This poverty, he said—echoing the sentiments of his left-wing critics—had its “roots in a history of racial discrimination ….” Thus, in an effort to confront widespread poverty and racism with “bold action,” the president promised to send lots of money—not for merely replacing what was destroyed, but to build up even “higher and better” than before. He promised tax breaks, government-funded accounts of up to $5,000 for education and childcare for each evacuee seeking a job, etc.

Never mind the corruption—just throw money at the problem and hope for the best. One Missouri congressman even complained about being forced to sign off on the president’s initial $62 billion rebuilding bill “even though we knew a lot of the money may go to waste.” Isn’t this a much bigger problem than poverty or racism? Government handouts for poor people amount to 14.6 percent of President Bush’s overall budget, nearly twice the dollar amount that President Clinton spent on poverty. Yet, if much of the money intended to help storm victims disappears or is wasted away in bureaucracy, are these programs really serving their intended purpose? Poverty, after all, is at about the same level it has been for the past 40 years, even though we are dumping money into these programs by the hundreds of billions.

That brings us to another question that has not been answered, although several media outlets and a few maverick politicians have at least asked it. That is, how are we going to pay for all of this? The day after the president promised the moon to the Gulf Shore, he admitted that rebuilding will cost a lot of money. “It’s going to mean that we’re going to have to make sure we cut unnecessary spending.” It makes for a great sound bite. But politicians have been saying things like this for years—even as they continue to spend more money, start new programs and expand the size of government bureaucracy.

Nowhere to Cut?

According to Stephen Moore’s column, a few dozen congressmen proposed an amendment be added to the initial $62 billion hurricane relief bill that the president pushed through Congress. The idea was to cut other government programs by 2.5 percent—just 2 _ pennies trimmed from every dollar spent by a federal agency. According to Moore, “The Republican leadership would not even allow it to come to a vote, on the grounds that there was no waste which could be easily identified and cut” (op. cit.). The amendment didn’t even make it to the floor.

When asked later about possible budget cuts that Congress could make, House Majority Leader Tom DeLay (who later temporarily resigned from his top position in the House after a Texas indictment) said he would be glad to make cuts, but that “nobody has been able to come up with any yet.” A reporter then asked DeLay, whom many consider to be one of the most conservative politicians in Washington, if that meant government operations were running at peak efficiency. DeLay’s response: “Yes, after 11 years of Republican majority, we’ve pared it down pretty good.”

Can he be serious? Federal spending has increased by 79 percent since “conservatives” gained control of the House in 1994. Yet, presumably with a straight face, Mr. DeLay went on to declare “victory” against wasteful government spending. He told reporters there is simply no fat left to be cut from the federal budget.

DeLay’s astonishing remarks prompted a number of conservative columnists to put forward long lists of suggested budget cuts—many of them singling out the $286 billion highway bill Congress passed in August. That bill contained a record amount of pork—more than 6,000 pet projects tacked on by politicians from both sides of the aisle, which will cost American taxpayers $24 billion.

The most publicized of these additional “earmarks,” as politicians affectionately call them, is the infamous Alaskan “bridge to nowhere”—a $223 million project, sponsored by Rep. Don Young. A career politician and member of Congress for more than 30 years, the Alaskan Republican bragged that the highway bill was “stuffed like a turkey” with all sorts of treats for his state. The bridge will be named after Congressman Young, but to honor what? His skillful lobbying for pork?

President Bush had originally said he would reject any bill above $256 billion. Later, he raised the spending limit to $284 billion, before finally signing on—as he has for every congressional spending bill since becoming president—at $286 billion.

Going back to the early 1990s, when Democrats controlled Congress, the average number of pork projects stacked on top of spending bills amounted to about 4,000 annually—in itself, an embarrassment. Today, with a Republican majority in both the House and Senate (as well as the White House), there are more than 15,000 pork projects each year.

And yet, neither the president nor the House majority leader can find any room in the budget to cut costs?

Ryan Sager wrote in the New York Post, “The point of the debate among the Republicans isn’t about whether to spend the money needed to rebuild after Katrina—that’s a given. The question is whether, even under the most extreme of circumstances, they can make even the most minor of cuts to the size of government” (September 19, emphasis mine throughout).

Indeed, if our leaders won’t reduce their standard of living even in the midst of a national tragedy, when will they ever do it?

Dangerous Precedent

Politicians throw around the terms billion and trillion so often these days that it can seem like spare change. To help put the estimated cost for Katrina ($200 billion) in perspective, Stephen Moore said it amounted to about $400,000 for every family displaced by the hurricane. Think about the standard of living each of those families could have if starting off with $400,000 to invest! Of course, there’s also the infrastructure to build up—particularly in New Orleans—but still, 200 billion dollars? That’s a lot of money to go around—more than we’ve spent on the war in Iraq.

Moore wrote, “Politicians from seemingly every congressional district appear to be elbowing their way to the orgy table for a slice of this $200-billion pie. At last count, 12 governors declared their states emergency disaster areas, and thus eligible for federal aid. Iowa, Michigan and Utah, for example, states nowhere near the hurricane, are lining up for disaster relief funds” (op. cit.).

And why not? It’s free money. If politicians won’t sign off on a highway bill unless they get hundreds of millions of dollars for unnecessary “projects” in their state, why should they sign off on a bloated hurricane-relief bill unless they get some sort of compensation?

Isn’t it a wonderful system?

Following up on the president’s $62 billion of initial relief, Louisiana’s two senators (a Republican and a Democrat) authored the Hurricane Katrina Disaster Relief and Economic Recovery Act, hoping to push it through Congress while politicians are in the mood to “give.” The $250 billion bill, according to the Washington Post, would cost more, on an inflation-adjusted basis, than the entire Louisiana Purchase of 1803. The bill actually calls for the Army Corps of Engineers’ annual budget to be increased by 900 percent—from $4 billion to $40 billion. Besides rebuilding the infrastructure of New Orleans and helping rebuild other destroyed communities in Louisiana, the bill also calls for $14 billion to go toward ecosystem restoration and another $13 billion for the Louisiana Department of Transportation and Development. According to the Post, “It also includes hefty payments to hospitals, ports, banks, shipbuilders, fishermen and schools, as well as $8 million for alligator farms, $35 million for seafood industry marketing, and $25 million for a sugar-cane research laboratory that had not been completed before Katrina” (September 26).

Senators Vitter and Landrieu admitted it was a lot of money when they introduced the bill. But they said an unprecedented tragedy requires an unprecedented response.

Speaking of precedent, assuming this bill is approved (or some variation of it), what will it signal to other regions ravaged by future disasters? If the federal government is now obligated to rebuild New Orleans better than before, and without regard to cost, what happens if hurricanes intensify? What if the “big one” finally splits Southern California? Or a nuclear bomb obliterates a major U.S. city? How much would it take—how long would it be—before our fragile economy grinds to a halt?

As we told you in last month’s Trumpet, Jesus prophesied that weather disasters would take a violent turn for the worse in the days leading up to His Second Coming. “And great earthquakes shall be in divers places, and famines, and pestilences; and fearful sights and great signs shall there be from heaven” (Luke 21:11; see also Matthew 24:7). Weather disasters, as they increase in frequency and intensity, are actually fulfilling Bible prophecy.

This prophecy, along with other geopolitical factors, will ultimately lead to a worldwide economic crisis brought on by the collapse of the U.S. dollar. When that happens, it will clear the way for a dangerous new world force to emerge out of the heart of Europe. The Trumpet, basing its analysis on the sure word of Bible prophecy, has made this prediction for years.

Debt Threatens Economy

Last year, the leftward-leaning USA Today ran an article on the astronomical debt our nation is plunging into. “$53 trillion is what federal, state and local governments need immediately—stashed away, earning interest, beyond the $3 trillion in taxes collected last year—to repay debts and honor future benefits promised under Medicare, Social Security and government pensions,” it said. “And like an unpaid credit card balance accumulating interest, the problem grows by more than $1 trillion every year that action to pay down the debt is delayed” (Oct. 3, 2004). Unless action was taken soon, the paper warned, the consequences could be “catastrophic.”

The article quoted Glenn Hubbard, who used to serve as chairman of the Council of Economic Advisors for President Bush. “Political leaders know this is a big problem. … I know the president is keenly aware. But in an election year, it’s not easy to talk about. The solutions may be very painful. If he is re-elected, I think he will make this a top priority next year.”

Sadly, that has not happened. Federal spending has grown by 7 percent this year—and that’s not counting costs for the Iraq war or the relief needed for Katrina and Rita. Under President Bush’s watch, the federal government has undergone its largest expansion since Lyndon Johnson’s Great Society.

In our May issue, we referred you to a comment made last November in a private meeting by Morgan Stanley’s chief economist, Stephen Roach. According to the Boston Herald, Roach suggested the United States had less than a 10 percent chance of avoiding economic Armageddon! “It struck me how extreme he was—much more, it seemed to me, than in public,” one source who attended the meeting was quoted as saying (Nov. 23, 2004). According to the Herald, “Roach’s analysis isn’t entirely new. But recent events give it extra force.” That was a year ago.

More recently, an Associated Press story picked up on this same theme. According to journalist Robert Tanner, “A chorus of economists, government officials and elected leaders both conservative and liberal is warning that America’s nonstop borrowing has put the nation on the road to a major fiscal disaster—one that could unleash plummeting home values, rocketing interest rates, lost jobs, stagnating wages and threats to government services ranging from health care to law enforcement” (August 27). The article featured an interview with David Walker, who audits the federal government’s books. He said, “I believe the country faces a critical crossroad and that the decisions that are made—or not made—within the next 10 years or so will have a profound effect on the future of our country, our children and our grandchildren. The problem gets bigger every day, and the tidal wave gets closer every day.”

Two days after that ap story was posted, Katrina slammed into the Gulf Shore. And how have we gone about getting out of that $200 billion mess? Borrow more money. Just charge it to the deficit.

“Certainly, there are those who feel such comments bring to mind the preachers who predict the end of the world at a specific time and place, and have always been wrong …. But something has changed. More than two centuries ago, Benjamin Franklin warned: ‘He that goes aborrowing, goes asorrowing.’” That’s not the Trumpet’s warning—it’s from the Associated Press!

The article projected this year’s deficit to be $331 billion—about $100 billion less than expected—before the hurricanes, that is. The nation’s overall debt has now surpassed the $8 trillion mark—and it grows by about $1.5 billion every single day. Making matters unbelievably worse, politicians have promised Americans many trillions more in entitlement programs like Social Security, Medicare and Medicaid. As mentioned earlier, we would need another $40 to $50 trillion in the bank to follow through on all those promises.

One congressman suggested that simply delaying the new, multi-trillion-dollar prescription drug benefit for seniors would save us $40 billion this year—money that could then be re-directed to hurricane relief.

Can’t do it. Seniors gotta have drugs. Our troops gotta have guns. Poor people gotta have welfare. We can’t leave any child behind in education. Louisiana has to have $250 billion to rebuild everything from roads to alligator farms. And how will Alaskans survive without a bridge to nowhere? Everyone—poor, middle class, wealthy, young and old, every special interest group, every politician, every state, every victim of disasters—everyone must get paid.

There is simply no room to make any significant cuts in the federal budget. We must keep borrowing.

Day of Reckoning

According to an Associated Press survey, at least 70 percent of Americans consider themselves at least somewhat or significantly worried about America’s addiction to deficit spending. Seventy percent—that’s an overwhelming majority! Ah, but here’s the kicker—only 35 percent of those surveyed were in favor of the government making spending cuts that would reduce government services! And only 18 percent were willing to have their taxes raised to keep government services where they are. And get this: A measly 1 percent of respondents were willing to raise taxes and reduce spending.

As the ap article noted, “The nation’s political leaders could hardly be said to have a mandate calling for fiscal responsibility” (ibid.). That’s because most Americans themselves are living far beyond their means! On average, we save nothing from what we earn. Debt consumes about 20 percent of the money Americans have left over to spend after taxes and payments for food and housing. We are a nation of deficit spenders. And while I haven’t conducted a survey, I’ll bet a majority of those who are up to their eyeballs in debt worry about their deficit spending, either “some” or “a lot.”

But instead of making cuts in the family budget, we go right on spending. And why not? There’s always free money available. There’s always a way to bump up the spending limits. There’s always another credit card we can add to the plan. There’s always another loan. And we had better be grateful for all these high-interest handouts, because there are always—always—a lot of things that we absolutely must have.

It’s the exact same, greed-is-good mentality that paralyzes politicians in Washington and practically every other state and local governing body in America.

A vast majority of Americans are worried about where our deficit spenders are leading this country. But a pathetically miniscule number of people are willing to make any kind of sacrifice, whether personally or nationally, in order to avoid disaster! And for that reason, politicians will continue looting the Treasury—running up astronomical debt for oncoming generations. They do it for the same reason looters raided Wal-Mart during the New Orleans flood—because they can. No law enforcement agency is there to stop them.

But there will be a day of reckoning. American voters may not hold their leaders accountable for their reckless spending—but one day, in the not-too-distant future, foreign creditors will. “In a very real sense,” the ap story continued, “the U.S. economy is dependent on the central banks of Japan, China and other nations to invest in U.S. treasuries and keep American interest rates down. The low rates here keep American consumers buying imported goods.”

To this point, foreign investors are willing to finance our debt because of how dependent their economies are on Americans consuming foreign goods. As long as there is something in it for them, they will continue financing our debt. And as long as they do that, we will go right on spending. And when bad things like Katrina happen, we’ll borrow more to dig ourselves out of a hole.

But the party will not go on forever. Eventually, outside “law enforcement” will show up, and the looting will come to an abrupt halt.

Are you prepared for that reality? If not, you had better wake up!

And if you don’t like hearing that from the Trumpet, then please heed the warning from the Associated Press: “There’s no way we’re going to grow our way out of our long-range fiscal imbalance,” said David Walker, the one who audits the government. “I really do not believe the American people have a real idea as to where we are and where we’re headed, and what the potential implications are for the country if we don’t start making some tough decisions soon.”

Are you worried about what’s ahead? If so, judging by surveys, you’re not alone! A large American majority is worried. The question is, Are you prepared to make tough decisions? And will you follow through with sacrifice?