What Should a President Trump Do?
The Budget
By: Victor Davis Hanson
The U.S. is broke. It owes over $35 trillion, mostly to American and Chinese bond and T-bill holders. The interest alone costs nearly $1 trillion, larger than the annual defense budget. The aggregate debt is now 123% of the annual GDP. Each American resident owes some bondholder about $103,000.
How can this be, when the average upper-middle-class income earner can pay 37% on federal income tax, 10-13% California income tax, perhaps 10% in FICA and Obamacare surcharges, and thousands of dollars in property and gas taxes? It is not hard to lose 60% of one’s income to the government if one is honest and follows the tax code.
When Biden says, “Pay your fair share!” he, of course, exempts his son Hunter on tax evasion charges, and he and his brothers, who likely never paid full tax on the vast off-the-books quid-pro-quo sums they shook down from other countries. Nor does he mean the 50% of Americans who pay no income tax. Instead, Biden is targeting the upper-middle class, the 1-5% of Californians, for example, who pay over 50% of all the state’s income tax revenue (and who are leaving each year at the rate of 300,000 and more).
We are, in other words, in the historical red zone.
Yet the Biden administration is borrowing $1 trillion every 90 days, mostly either for entitlements or inefficient and counter-productive “green” projects. Why? Is it trying to win new constituents by giving away costly free stuff: immigration amnesties, student loan forgiveness, sustenance for 10 million illegal aliens?
The 2010 formation of the Simpson-Bowles “National Commission on Fiscal Responsibility and Reform” offered a gradual but methodical tax simplification/ spending reduction pathway to balanced budgets and eventual reduction in national debt.
Had the Obama administration just pushed the recommendations of its own commission, the then $13 trillion national debt would have been reduced to $9 trillion by 2020 and perhaps a mere $7 trillion now (rather than $35 trillion).
We could still easily implement the commission’s recommendations on spending cuts, entitlement reform, and tax simplification, and soon begin balancing budgets on our way to national debt reduction.
The problem is not in government or politics but in us, the people, who repeatedly shrug when our government borrows trillions for pet but wasteful projects.
So, we Americans are the culprits for weakening the country and destroying our financial system. If we don’t stop borrowing now, the only solutions can be found in history’s civilizational-ending remedies: hyper-inflation Weimar-Republic-style to pay back debts in worthless dollars, Soviet—or Cuban-style appropriation of private wealth, or late Roman Republican-style cancellation of debts and defaults on private and public loans.
We need to adopt an Eisenhower mindset of immediately calibrating every new expenditure in terms of how to fund it: Should we drain the strategic petroleum reserve? OK, where is the money to resupply it? Perhaps pump x-amount more oil and gas on federal lands?
Give Ukraine $12 billion?—Fine, but what tax, surcharge, or government cut will provide the replacement money? Perhaps slash commensurate foreign aid to Hamas and the West Bank, Yemen, Jordan, or Nigeria?
Welcome in and support 10 million unaudited illegal aliens?—Where are hundreds of billions of dollars to come from to pay for their current hotel accommodations and food/health/legal/education support? Perhaps tax Mexico and Central America 15% on all remittances sent from the United States to illegal aliens’ countries of origin?
When Trump ran in 2016, mention was made about a charge for remittances going out of the country. If memory serves, the amount may be well over a billion dollars annually. Forget a tax on Mexico and Central America! Place a 15% tax on ALL remittances leaving the country.