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Congress is tossing around trillion-dollar relief packages, as we might a car or student loan, or a loan from Aunt Sally. A trillion is a big number, difficult even to conceive. Five thousand round trips to the sun would amount to less than a trillion miles. A trillion hours is greater than 100 million years, which would take one back to the Cretaceous Period when dinosaurs roamed the earth. A stack of a trillion one-dollar bills would reach 67,866 miles into the sky. The earth contains seven and a half billion people, a big number but less than one percent of a trillion
Here in the land of make-believe, the Democrat-led House of Representatives just passed the $3 trillion HEROES Act. A month earlier, Congress passed, and the President signed, the $2 trillion CARES Act. Combined, that Five trillion exceeds the 2020 federal budget. It exceeds, in current dollars, what we spent to conduct World War II. “Desperate times call for desperate measures,” is an ancient adage. However, do American taxpayers fully comprehend the size of the obligation to which Congress has committed them, their children and grandchildren? Senator Everett Dirksen (1896-1969 – R-Il) is alleged to have said: “A billion here, a billion there and pretty soon you’re talking real money.” Here it is, two generations later, and we’ve upped the ante a thousand-fold. In a time of crisis, Americans should not be parsimonious, but we expect our representatives to be prudent and respectful about spending money that is not theirs. To use this money to bail out profligate states and extend already generous benefits to public employees should not be the purpose. America needs to get back to work.
Government generates no income. That is hard to believe, given the lifestyles and the prodigality with which politicians toss money around. Government takes from taxpayers, and it borrows on behalf of those same taxpayers who are legally committed to pay it back. With a median annual household income in the U.S. of $63,000, and assuming a four-person household, the proposed borrowing for COVID-19 and its economic fallout amounts to just under a year’s income for the average household. And, that $5 trillion is on top of total federal debt of $22 trillion, growing at a rate of $1 trillion a year. Unfunded pension and health benefits compound the debt problem for the American taxpayer. Depending on the discount rate one uses, unfunded liabilities approach $50 trillion. Where will the money come from? There are only three answers: one, growth in GDP, which requires free markets, rule of law and limited but sensible regulation; two, higher taxes, which inhibit economic growth, and/or three, a depreciated dollar, which will reduce future living standards.
