First, allow me to explain two things this blog won't do. Firstly, it won't attempt (at least knowingly) to manipulate statistics to prove a point that's consistent with my agenda. There are three kinds of lies: Lies, damned lies and statistics, and it's my intention to prevent lies from tainting any facts that I share in this blog.
Secondly, it won't attempt to turn this into a political issue, at least not republican versus democrat. Some people spend a lot of time trying to point the finger of blame from one party to the other. It reminds me of the Dr. Seuss story of the Sneetches. Many people may not know this story, which usually is meant to teach about prejudice, but I think is also a good way of thinking about dyed-in-the-wool Republicans and Democrats. You can see a brief recap of the story here.
The SneetchesAs you'll see later on, neither major political party in the United States can point a finger of blame. Both parties have succumb to the siren call of power that comes with spending huge sums of money, and it really makes one wonder whether change can really happen within the present two party system. But perhaps we'll leave that for another blog.
So what does Franklin Delano Roosevelt have to do with today's almost $15 trillion federal government debt? Here's where the facts come in.
The first federal debt was recorded on January 1, 1791, during George Washington's first presidency, and it was just over $75 million - not bad for starting a country! Washington became president in 1789. A presidential election occurs every 4 years, so let's spend a moment looking at what's happened to the debt in those 4 year cycles.
In the first 144 years (or 26 cycles of presidential elections), our country went through a period of nation building, land acquisition, civil war, foreign war, health epidemics and economic depressions. During that period, our debt as measured at the end of a 4 year presidential cycle:
- Increased 17 times
- Decreased 19 times
- by June 30, 1933, the debt was under $23 billion. $18 billion of that increase came during the years of World War I.
- While seemingly a large increase, as the debt was now about 306 times larger than in 1791, it only represented an increase of approximately $160 million per year each year.
- If the debt had continued to increase at that rate, it would now be about $35 billion. Of course, it's slightly larger than that!
From 1933 to 2013 (yes, it's safe to predict what's going to happen in the next 18 months), the debt:
- Increased 19 times during the 4-year cycles we're looking at
- Only decreased once (after the end of WW II).
- The debt increased an average of $187 billion per year - a huge increase.
What constitutes the "General Welfare" of the United States? That simple question has no simple answer, and even two prominent authors of the constitution (Madison and Hamilton) disagreed on the interpretation. Of course I have an opinion, but my opinion doesn't count for much. Unclear constitutional issues require clarification through constitutional amendment, and that's one of the solutions our country needs to pursue in order to get our national debt under control.
What is clear is that up until about 1936, the Federal Government took a fairly narrow view of what General Welfare meant, and the Supreme Court was fairly consistent in its support of that definition. In the 1930's, a number of programs were introduced (National Industrial Recovery Act, Agricultural crop payments, Social Security) by FDR, and quickly met challenges that rose to the Supreme Court. Because the Court took a fairly narrow view of what "General Welfare" meant, it ruled against the programs. FDR had enough, and threatened to stack the court with justices that would deliver his brand of justice. His justification, as quoted from his second Inaugural address in January 1937:
"I see one-third of a nation ill-housed, ill-clad, ill-nourished.''
By May of that same year, the court reversed its view on General Welfare, perhaps as an act of self-preservation, and in what is now called the "Switch in time that saved nine", judged in favor of two "New Deal" cornerstones - unemployment tax, and old age benefits as part of Social Security.
Those decisions launched the seemingly unstoppable juggernaut of federal spending and the growth of the federal government, as well as the creation of numerous entitlement programs. No presidency since then has taken any meaningful steps to either rein in federal spending, limit deficit spending, or more completely define what General Welfare means. Without a clear definition of that single term, any future government could find a way to justify almost any action.
The other key point to remember is that any power given to the Federal Government means that it is taken from the local state government. Our country was founded as a Republic of United States, giving all power to the states, except those powers enumerated to the Federal Government. What has happened over the past 80 years is that the power and importance of the individual states has been compromised in favor of consolidating power into a centralized government.
Isn't that what the Revolution sought to correct in 1776?
Before concluding with a couple of steps to resolve the issue, let's quickly examine whether the last 80 years has seen improvement on the issues Roosevelt saw as a threat to the country (ill-housed, ill-clad, ill-nourished). After 80 years of ever expanding federal government control and spending, we would expect to see some pretty amazing results:
- Unemployment is at it's highest level since 1948, with almost 10% of the workforce looking for work.
- Foreclosure rates are at an all time high, and have been on the increase for decades. Almost 1 million homes have been foreclosed on this year
- There are almost 48 million people receiving food stamps (US Debt Clock)
- 66 million people receive Social Security retirement &/or disability benefits (US Debt Clock).
- There are over 20 million government employees at the federal, state and local levels. That's about 15% of the total work force (US Debt Clock).
- The average American household’s credit card debt in 1990 was $2,966. In 2007 it was $9,840.
- In the late 1950's, the poverty rate was 22.4%. In 2009, the rate was 14.3%. In spite of how bad our economy is doing, poverty is nowhere near what it used to be. The poor are definitely less poor.
I'm concerned that more and more people are relying on the government to get fish. Poverty has decreased, but how is that possible when so many other metrics are out of whack? I think we've taken the notion of general welfare way too far when such a high percentage of the population RELIES on getting money from the government. What would the poverty rate really be if it weren't for ever-increasing government expenditures on entitlements?
That's the key word, that we heard so often in the debt ceiling crisis - entitlements. Should entitlement spending be cut? Here's a better question. Who says anyone is entitled to anything in the way of money FROM the government. As citizens, we are entitled to certain rights, freedoms and liberties, but I certainly don't think that I'm ENTITLED to any of your (or your kids) tax money. The fact that we use the term so often and without convulsion is a true sign of our system illness.
All right, time to wrap this up. What can we do to fix the problem. Here's 2 steps:
- Make it illegal for the federal government to spend more than it earns, except under dire circumstances. Since the clowns in Washington can't be trusted to define dire, such over spending would require a majority vote in a national referendum.
- The term General Welfare needs to be defined in the constitution, by way of an amendment. We've seen what 80 years of letting politicians decide what is best for us has accomplished. It's time to reign them in.
We can't continue to spend more than we earn, either as individuals or as a country. It's simply common sense.
