DANGERS OF THE U.S. FEDERAL DEFICIT: “If You Don’t Have It, Don’t Spend It”
Imagine if I were the chairman of a large public corporation that not only was losing money, but declared it would continue to lose money for the foreseeable future. What if I announced that through a comprehensive course of cost reduction, the company would be able to break even by the third year, but that management had rejected this strategy? What if I further declared that large expense categories, such as material, labor, burden, and general and administrative costs could not be touched under any circumstances? You would think I had taken leave of my senses and would call for my resignation. Yet that is precisely how our federal government operates.
If the U.S. government were a corporation, creditors and shareholders would refuse to support an organization which for fifty years had set records for outspending its receipts. A company like that would be broken up; its assets sold off to try to satisfy its debts.
Is it really too much to ask for the federal government to apply the same fiscal philosophy and be held to the same financial standards as public corporations? The politicians in Washington, both Republicans and Democrats, appear to believe the federal government can borrow ever-more increasing sums because we will always be able to tap foreign creditors in order to finance our deficit. But on our current trajectory, there will soon come a time when our foreign friends will tell us politely that we are no longer creditworthy.