Capital Commentary is the weekly current-affairs publication of CPJ, written to encourage the pursuit of public justice.
Fiscal Justice for Tomorrow’s Children
Todd P. Steen
By Todd P. Steen
September 29, 2014
Throughout 2013, Washington was the scene of an extended battle concerning potential cuts in government spending. Because our nation was about to reach the debt ceiling, some agreement had to be reached. After several months of political theater, as well as a partial government shutdown, Congress ultimately suspended the debt ceiling and reopened government. Most people said that this was no way to run a country. The debt ceiling was criticized as archaic and unhelpful and seen as an opportunity for all sorts of political shenanigans. Americans then returned to business as usual-- the business of spending beyond our means.
Since then, there has been hardly a peep about reining in government spending. Our politicians have moved on to other issues, and spending is near an all-time high. Although a midterm election is right on the horizon, it is nearly impossible to find a campaign where government spending is a central issue. But isn’t the news good? The deficit has been reduced, and the economy is recovering, albeit slowly. According to the White House, this year’s budget deficit will decline to 583 billion dollars, the lowest level in several years.
If one looks a little more closely, however, the news is not so good. Our national debt, currently around 17.7 trillion dollars, is expected to increase indefinitely, with the debt (held by the public) to GDP ratio reaching 100 percent by 2039, the highest level ever recorded in peacetime. Increased spending and borrowing extend out into the future, further than the eye can see. According to the Congressional Budget Office, our current fiscal situation, one where we will have to borrow over 500 billion dollars this year, will be about as good as it ever gets. Our current historically low interest rates only mask the problem; we can borrow cheaply now, with seemingly little pain.
Other items of substantial concern are “unfunded liabilities,” promises the government has made to pay for future health care, worker pensions and other programs like Social Security and Medicare. The federal government has made at least 50 trillion dollars of future commitments without setting aside funds to fulfill these promises, while states have made trillions more. These commitments will have to be paid someday, or these promises will have to be broken.
What do the demands of justice and stewardship suggest about the level of government spending in our economy? A portion of the government spending currently taking place is done specifically as a response to injustice in our society and economy. Other spending happens because of desire, convenience, tradition, or even fraud. While many of the spending programs are worthwhile and necessary, some are not. What is clear, however, is that we are spending beyond our means, and that we have been doing so for the last fifty years. Our desire to spend, without counting the cost, is leading to a great injustice for our children and our children's children. When we act like we don't have limits, we selfishly pass on substantial bills to future generations.
One sensible limit for our spending is to base it on the amount of tax revenue that we collect. It is not impossible to balance budgets; states, families, corporations and non-profits do it all the time. This of course raises questions about fair levels of taxation in our society. Some will say my argument suggests not only the necessity for reducing government spending, but also mandates the need for a significant increase in taxes. I do not necessarily agree with this second position, even though I expect higher tax rates in the future. Tax revenues are already at an all-time high. Increasing tax revenues has rarely led to balanced budgets, but has often brought about increased expenditures.
Although the analogy of family finances is far from perfect, I believe all would agree that parents shouldn't spend more than they can bring in, expecting their children and grandchildren to foot the bill. However, when it comes to the spending by our governments, there is very little hesitation to pass along the invoices for our spending to the future. What is amazing is how easily we do this—how rarely we consider the fiscal future of tomorrow’s children. There is little discussion, no angst, and only occasional attention to the younger generation who show signs of increasing hopelessness concerning their futures.
How can we justify billing the future for our desires today, even if they are completely noble? Are our causes that just? Or is it just easier to pretend that we don’t have to live within limits? My message is not that we should be unconcerned about injustice now; of course we must. But justice is not static, concerned only with the here and now. If there is a problem today, we can't work on it at the cost of justice for those who live in the future.
- Todd P. Steen is the Granger Professor of Economics at Hope College and serves as managing editor of Christian Scholar’s Review.
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Capital Commentary is a weekly current-affairs publication of the Center for Public Justice. Published since 1996, it is written to encourage the pursuit of justice. Commentaries do not necessarily represent an official position of the Center for Public Justice but are intended to help advance discussion. Articles, with attribution, may be republished according to our publishing guidelines.”