Terrry Bracy: When the perpetual money machine breaks down

With the national debt approaching $500 billion, congressional leaders in 1974 decided that federal spending was out of control. Their response was to create a process requiring that programs would no longer be approved independently, but as part of a unified annual federal budget. The dual goals were first to balance annual budgets and then begin paying down America’s bills. The Budget Act of 1974 was a policy success but a practical failure as the U.S. debt has spiraled in the last 52 years to an astounding $38 trillion.

Aside from the costs of the Iran War which in its first week reportedly spent $11.5 billion, the incumbent administration, which campaigned on spending cuts, is doling out dollars at the record rate of $6.6 billion a day.

It has been two decades since then-Vice President Dick Cheney declared that “deficits don’t matter,” thus establishing a creative economics principle that administrations of both parties were pleased to follow. When then-Treasury Secretary Paul O’Neill objected and refused to endorse a second Bush tax cut, the Vice President had him fired.

Cheney’s premise was based upon the strength of the dollar as the world reserve currency in which other nations and foreign individuals invested heavily. At the time, the dollar had few competitors, which allowed the U.S. to share our debt and inflation with the rest of the world. Since the Reagan years, world debt held in dollars has declined from 71% to 58%, the kind of downward trajectory that makes bankers swallow hard.

According to available research, the greatest contributors to the national debt are the wars we have fought since 1775 — $22 trillion. Most were wars of necessity and were at least partially paid for by taxes, which were accepted as a patriotic contribution.

Since 9/11, however, the wars of choice in the Middle East have been put on the credit card at an estimated cost of $8 to $10 trillion. If the national wallet were not empty enough, the Trump Administration piled on the largest tax cut in American history, claiming the Republican orthodoxy known as the Laffer curve. This is the since disproven theory of economist Arthur Laffer, holding that lowering taxes on the wealthy will generate so much business activity that the move will pay for itself. It has been proved wrong once again.

Then there is the real culprit – Congress. The Constitutional duty to raise taxes and spend appropriations belongs in the first instance to the House of Representatives, with Senate approval. The budget process comes first and is intended to shape the broad outlines of a national budget. Once that is agreed on, the scene moves to the Appropriations Committee, which splits the task to its 12 subcommittees which dig into the details of every executive cabinet department and agency before being reported to the House floor for a vote. It is beautiful governmental design which no longer works.

Instead, since enactment of the Budget Act, Congress has failed more than two hundred times to bring individual annual funding bills to a vote, and after modest efforts to find agreement between the disputing parties then approves a continuing resolution which simply pushes forward the prior year allotments. This is an escape hatch freeing Congress from making any serious attempt to cut budgets.

Worse are the shutdowns of all or some agencies, as is the case today, caused by the rancid abuses of the Trump ICE enforcement. I personally believe that Trump’s personal army should be abolished as soon as possible. In the meantime, essential employees across a sprawling department not involved with immigration are forced to man airports and otherwise provide security without being paid. I agree with Senator James Lankford that workers should be paid and Congress forced to remain in session day and night until an agreement is achieved.

America’s governmental systems are failing in front of our eyes, and the consequences will be profound. The Trump Administration still lives on the fumes of the world America has been able to lead since the end of World War II. That era disappears further into our noble past each day we are governed by pretenders and fools who thought they could display their biceps and opponents would collapse. Countries that once depended upon our wisdom, protection, economy and our currency are meeting without our leaders. The Perpetual Money Machine is running out of deposits.