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“I say again, the era of big government is over.” President William J. Clinton January 23, 1996
“For he on honey-dew hath fed/ And drunk the milk of Paradise;” so ends Samuel Taylor Coleridge’s poem “Kubla Khan.” Xanadu, an extravaganza, was located in Mongolia, north of Beijing. Kublai Khan, grandson of Genghis Khan, was Emperor of China. Xanadu became his first capital, later his summer palace. Khan was the founder of the Yuan Dynasty and ruled China for thirty-four years (1260-1294).
We in the United States have not been so grandiose…yet. However, in Washington there is a sanctimonious belief that all problems can be solved by government, that its bounty has no limits. In the September 12, 2023 issue of The Telegraph (London), Ambrose Evans-Pritchard and Jeremy Warner wrote: “The fiscal scale of Bidenomics is larger than Roosevelt’s New Deal in the 1930s by a wide margin. It is larger than Johnson’s guns and butter in the 1960s, or Reagan’s military rearmament in the 1980s. We are witnessing an extraordinary experiment in U.S. economic policy.” The New Deal was a response to a global depression. Johnson’s Guns and Butter was to fund the Vietnam War and his “Great Society.” Reagan’s rearmament won the Cold War. Bidenomics was to mend the nation’s infrastructure, combat a pandemic that was already being addressed, and to fight inflation, a result of easy money, business closures during the pandemic, and rises in energy prices caused by Mr. Biden’s curtailment of exploration and production.
Expanding tentacles of our enlarged administrative state raise questions: How much larger can the federal government grow? White House employment alone, at 524 people, has grown by 27% in the past three years. Is it possible to shrink entitlements, the fastest growing segment of spending? What will be the effect of rising interest rates, which in two or three years will cost a trillion dollars a year? Interest costs are already roughly equal to defense spending. Will defense suffer in an increasingly dangerous world? (At 3.5% of GDP, defense spending is about half of what it was in 1982.)
The numbers are sobering. U.S. GDP is estimated to be $27 trillion in 2023. Total federal debt for this year is estimated to be $32 trillion, or 118.5% of GDP. In addition, state and local debt were $2.1 trillion in 2022. To put those number is in perspective, the ratio of federal debt to GDP at the end of World War II was 117.5 percent. That ratio declined for several years, troughing in 1981 at 32.5%. Fitch Ratings recently lowered their rating on U.S debt from AAA to AA+, saying that “the ratio of debt interest to tax revenue will reach 10% by 2025, the level where it starts to create a snowball effect.”