Opinion from a Libertarian ViewPoint

Out of Control Government and Isaiah’s Job

Posted by M. C. on September 3, 2022

by Richard M. Ebeling

The reader may have noticed that I have given greater emphasis to levels of government spending than to amounts taxed or borrowed, per se. The reason being that it is government spending that represents the amount of private production siphoned off and out of the direct hands of the private producers and income earners of the society. This is how much the government plunders from the people of the country, regardless of whether the production and income that is transferred into the hands of those in political power has been done by taxation or borrowing.

It is very difficult to be a classical liberal or libertarian and not experience bouts of disappointment, frustration, and outright pessimism. The world around us seems to be going to hell in a handbasket. Government continues to grow and, apparently, is out of control.The greater the political power by government in the society, the more social power is diminished; that is, individual freedom is reduced and “the state” grows with its legitimized use of force over people’s lives.
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For example, the Congressional Budget Office (CBO) released its semiannual Budget and Economic Outlook, 2022-2032 in late May 2022. The CBO expects that when the federal government’s current fiscal year ends on September 30, 2022, Uncle Sam will have spent $5.874 trillion. Tax revenues from all sources will be $4.890 trillion, leaving a budget deficit for the fiscal year of $1.036 trillion. Total national debt held by the public will come in at $24.173 trillion, while the gross national debt (which includes Treasury securities held by other government agencies) will be more than $30.621 trillion.

Gross Domestic Product (GDP) is expected to equal $24.694 trillion in 2022. So, this means that federal spending will 23.8 percent of GDP, while taxes will absorb 19.6 percent of GDP. The more than $1 trillion deficit will amount to 4.2 percent of GDP.

Bigger government in the years ahead 

Things do not get better looking over the coming decade, the CBO anticipates. In 2032, federal expenditures are expected to total $8.469 trillion, for a 51.8 percent increase over 2022. Federal taxes are projected to amount to $6.662 trillion in 2032, or a 36.2 percent increase over a decade earlier. The budget deficit is predicted to be $2.252 trillion in 2032, representing a 217 percent increase over the deficit in 2022. Gross Domestic Product will be $36.680 in 2032, says the CBO, and will be 48.5 percent larger than in 2022.

The government’s share of the GDP pie, in other words, will be increasing noticeably faster than the national economy is projected to grow over the next 10 years. Also, the share of government borrowing to simply pay the interest on the existing accumulated national debt will be increasing as well. In fiscal 2022, the federal government will borrow $1.036 trillion, as we saw. Out of this, nearly $400 billion will be used to pay interest owed on the national debt, or about 39 percent of total borrowing. In 2032, when the deficit is expected to be $2.253 trillion, $1.193 trillion will be used just to pay interest on the, then, accumulated national debt, or 52 percent of all government borrowing in that year. So more than half of all the money the federal government will have to borrow 10 years from now will be used just to stay current on the interest payments due from all the earlier decades of annual deficit spending.

Of course, all of this has to be taken with a grain of salt. Ten years ago, the CBO did not anticipate the great economic contraction of 2020 caused by the federal and state government’s draconian response to the coronavirus crisis, that commanded the shutdown and lockdown of much of the U.S. economy for several months. And just two or three years ago, the CBO was still projecting that price inflation, as measured by the Consumer Price Index, would still be rising at a “modest” 2 percent a year in 2022.

Entitlement programs are heading for disaster

See the rest here

Be seeing you

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