America is currently facing a fiscal crisis that even its political elites are starting to notice.
Last month Federal Reserve Chair Jerome Powell declared that the federal budget is on “an unsustainable path” due to the national debt’s vast size — now at $23 trillion.
Powell informed the Joint Economic Committee that the “high and rising federal debt” could make future recoveries from economic downturns much more difficult.
“Over time, this outlook could reduce fiscal policymakers’ willingness or ability to support economic activity during a downturn. In addition, I remain concerned that the high and rising federal debt can in the longer term restrain private investment and thereby reduce productivity and overall growth,” Powell added.
The fiscal chickens are coming home to roost in America and this may not look pretty for future generations. Last month the Congressional Budget Office (CBO) reported that the deficit stood at $984 billion. This was $205 billion more than the “shortfall recorded in 2018,” according to the CBO report.
Frankly, both parties don’t care about the issue anymore. Big spending— be it for domestic goodies or democratic crusades abroad — are what’s fashionable among political elites. It’s no coincidence either, it’s the product of systematic public policy. The disastrous decade of the 1910s brought us policies such as direct taxation and central banking which ushered in an unprecedented expansion of the U.S. government. To this day, federal taxation and easy money are the linchpins of the seemingly irreversible trend of our gargantuan spending and constant government overreach.
Indeed, tax overhauls and a move toward sound money are some of the biggest fights that must be taken up at the federal level. Much to the dismay of freedom lovers, there are very few people in Congress —with the exceptions of Congressman Thomas Massie and Senator Rand Paul — that are willing to rise to the challenge.
The Federal Reserve Chair’s recognition of D.C.’s largesse is a good start. However, this must be followed up with concrete action. Far too often we see political figures recognize a valid problem, yet never do anything to actually solve it. This is the D.C. way: Lots of talk, very little action.
Nevertheless, this is a good time for advocates of fiscal restraint to join the discussion and offer real solutions, such as spending cuts and a move toward a market-based currency. The conversation has to start somewhere.