Cut federal spending drastically or face doom, America

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Published March 19, 2012

| FoxNews.com

When I wrote the final chapter of my new book, "Covenant of Liberty: The Ideological Origins of the Tea Party Movement," I argued that the United States must choose between two starkly opposite futures. Either we dramatically cut federal spending in half -- immediately -- or we will see governmental spending grow by 50% within the next two decades to European levels. 

To put this in context, our current level of federal spending is 24% of GDP. Cutting that spending in half, as I advocate, will reduce federal spending to 12%, a level consistent with our “fiscal constitution”—the peacetime level of spending that took place during the 142 years between 1789 and 1931. 

If we do nothing, the natural tendency of centralized governments to grow, combined with the unconstrained pandering of politicians of both parties, will cause federal spending as a percentage of GDP to grow to 36% within two decades, I argued. Combined with the 15% of GDP spent by state and local government, this will increase total government spending as a percentage of GDP to 51%--about the average today in all those European countries that are approaching bankruptcy. 

I made this argument recently in another op-ed: “Tea Party Founder: Time to Cut Federal Spending in Half.” 

Recent events have convinced me that the timeline I described in my book was incorrect. 

We don’t have two decades. 

Instead, in this hyper accelerated, 24/7 world of political movement, we have only a decade left. 

If President Obama is re-elected and succeeded by a Democrat in the White House for two more terms, spendthrift Democrats and weak-willed Republicans will combine to raise federal spending to 36% of GDP within a decade. All these politicians need to do is continue the Obama administration’s rate of increase for another ten years.

When President Bush left office in January, 2009, federal spending was 20% of GDP. Today, less than 4 years later, that number has reached 24% of GDP.  

As James Pethokoukis wrote recently, a new book has revealed that as far back as 2009, the Obama administration had a secret plan to raise taxes through the introduction of a Value Added Tax to support even more spending. 

Also recently, a CBO report said that ObamaCare will be twice as expensive as President Obama and the Democrats promised in March, 2010 to secure passage of his legislation. 

It’s clear to me that under a second term of the Obama administration, we’re likely to continue to increase spending at the same rate as we have during the first Obama term…an extra 1% of GDP each year. At that rate, we’ll be at 28% of GDP by FY 2017. 

If Obama is succeeded by a Democrat as President, say Hillary Clinton, by the end of her first term, federal spending will be at 32% of GDP in FY 2021, and by the end of her second term (FY 2025), we’ll be at 36% of GDP. 

By then, financially, the United States will be the new Greece

Even the most aggressive Republican budget plans are insufficient to stop this trend. Rand Paul, for instance, recently introduced a budget that would cut spending by about $800 billion in FY 2013, reducing it to 19.5% of GDP. But thereafter, Paul’s budget actually increases at the rate of inflation. 

In 1989, The National Review’s John O’Sullivan introduced “O’Sullivan’s First Law.” “All organizations that are not actually right-wing will become over time left-wing”. 

Columnist George Will expanded that law and applied it to governments. Paraphrasing his restatement:

 “Governments that are not firmly based in libertarianism or classic liberal principles will, over time, become collectivist or statist.” 

Since O’Sullivan introduced his law, technological advances have dramatically increased the speed at which ideas (good and bad alike) have been communicated in the political environment. Even more importantly, "the fierce urgency of right now”—the phrase President Obama repeated ad nauseum in his October, 2011 speech to Congress touting his warmed over Stimulus Package—has supplanted our heritage of two centuries of thoughtful deliberation by political leaders on major policy issues. 

Now, two decades after O’Sullivan introduced his classic axiom, with a hat tip to Alexis de Tocqueville, I offer an updated version, “Leahy’s First Law”: 

“Governments that are not firmly based on the principles of America’s traditional fiscal constitution will succumb to the natural pandering instincts of politicians and approach bankruptcy at a rate that accelerates in direct proportion to the speed of the news cycle.” 

If we wish to avoid national bankruptcy, our political leaders must immediately return to the principles of America’s traditional fiscal constitution, and cut federal spending in half. 

Rand Paul’s proposals for FY 2013 are a good start, but the cutting must continue dramatically and deeply thereafter in each successive year. Our goal must be to reduce federal spending from Paul’s proposed 19.5% of GDP in FY 2013 to 12% of GDP in FY 2016. 

Failing such bold and decisive action, we will certainly descend into national insolvency within a decade. 

Michael Patrick Leahy is the co-founder of Top Conservatives on Twitter and ElectionDayTeaParty.com. His new book, "Covenant of Liberty: The Ideological Origins of the Tea Party Movement," will be published by Broadside Books on March 20, 2012. He can be reached on Twitter at @michaelpleahy.

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