One of the most stubborn holdovers from the glory days of the Republican Party is that it stands for low taxes, small government, and fiscal responsibility. Voters continue to be lured with the promise that they’ll get to keep more of their hard-earned money and that the government will use the money they do pay responsibly. These are the values that swept Ronald Reagan to power so overwhelmingly and they continue to pervade the world view of many Americans. It’s a compelling story: Vote for us, or the “tax-and-spend liberal Democrats” will take all your money away.
But when will people ever understand that there is no free lunch? That continually failing to match government expenditures with enough tax revenues to produce a balanced budget creates grave problems for this country and by extension to all of us?
I used to be a fan of Ronald Reagan, but he almost tripled our national debt from $900 billion to $2.6 trillion, which means he accumulated more debt in 8 years than all the presidents combined before him. George W. Bush started office with a balanced budget which, incidentally, he inherited from a “tax-and-spend liberal Democrat”, but by the time he leaves office, our national debt is estimated to be close to $10 trillion. What’s more, he squandered the one opportunity we had after 9/11 to tell people that yes, taxes are needed to finance government programs, especially wars, and told us to go shopping.
This Republican administration will leave behind the biggest budget deficit we’ve ever seen. But why should we care, you might ask? If I get to keep more of my money, what does it matter to me if the government doesn’t seem able to do the same with theirs?
There are two reasons we should all care very much: Inflation and China. Mounting debt devalues a currency and creates inflationary pressure. As of July 2007, the rate of inflation in the U.S. has risen to 5.6%, the highest since 1991. Go ask your bank, but at my average money market savings rate of 2%, my money is worth less every year. Put differently, your money does not buy as much as it used to, as anyone lately visiting a grocery store or gas station can attest. And because our government has long run out of people in our country to borrow from, an ever bigger share of our national debt is financed by foreign creditors in Japan, Saudi Arabia, and China. Everyone can see the situation our dependence on foreign oil has gotten us into, but our dependence on foreign money is just as alarming.
The Republican Party has long ago abandoned its conservative values of small government and fiscal responsibility. Yet it continues to tell voters to be wary of the “spend-happy Democrats”. We continue to be told that our money is safe in the hands of the party that failed to manage our nation’s budget for the last eight years. So when John McCain tells us that he will lower taxes and somehow produce a balanced budget by 2013, remember that there is no free lunch. Why bet our future on a candidate who says there is?