OP-ED: States Empowered to Stop Reckless Deficits
December 29, 2021
In August of 2020, we wrote an opinion opposing Modern Monetary Theory (or MMT, the “too good to be true” idea that the federal government can spend unlimited amounts of money, regardless of revenue, in order to benefit the country and the economy). We disagreed with MMT on the strongest terms. Since that time, the federal government has added $8.4 trillion dollars to our national debt, which now stands at $29.2 trillion.
We appealed to the common sense that the government cannot fix everything, own everything, or control everything. We warned that printing unlimited quantities of money despite deficits would be inflationary, and that other countries that have gone down this path have destroyed their economies and currencies. (German currency became worthless and Germans lost everything due to hyper-inflation from 1920 -1923).
The numbers are now in. November consumer price inflation checked in at 6.8% while producer price inflation is pacing at 9.6% annualized. Used cars are up 31% year over year, energy is up 33%, and housing prices have increased 18.6%. Food items like meat and eggs are up 14% and 11% respectively. To exacerbate the inflation problem, supply has been decreased due to government regulation related to the pandemic and otherwise. Labor productivity has fallen at the fastest rate recorded in the past 60 years, and farm productivity is down. An accelerating supply of money chasing after fewer goods and services presents a horrifying inflation scenario.
We are sorry to report that the fiscal 2022 federal budget continues to accelerate long-term deficit trends and spends $6 trillion dollars despite a $4 trillion income. These numbers do not include the potential “Build Back Better” plan.
For fiscal year 2022, entitlement spending is expected to be $3.9 trillion. Interest on the debt is projected at $.3 trillion. An alarming 100% of revenue is spent on entitlements (Medicaid, Medicare, Social Security, childcare payments, unemployment, etc.) and interest on the debt. This means that to pay for national defense or infrastructure, we must borrow from foreign nations or just print money that will debase our currency and lead to even higher inflation.
Are we so foolish to think that China or other foreign adversaries will continue to fund our military by buying US debt? How can the poorest among us afford double digit increases in food prices? Affordable housing and transportation are unattainable with price inflation at 18% and 31%. How is this just? These long-term trends are unsustainable. Either we stop it, or a foreign power will subdue us, taking our land, resources, and liberty when we are too financially weak to defend our nation.
A solution to Washington’s political malfeasance is a Convention of the States. The United States Constitution provides the states the constitutional power to bring the federal government to heel when both political parties in Washington have lost all sense of reality. Reagan said it best: “We can’t depend on Congress to discipline itself… we must rely on the states to force Congress to act on our amendment. Fortunately, our Nation’s Founders gave us the means to amend the Constitution through action of state legislatures… That is the only strategy that will work.” Ronald Reagan SOTU address, 1984 (speaking of the article V state process for a balanced budget amendment.)
Please learn more and email your legislators in support of a Convention of States by signing the petition for a Convention of States here.
State Rep. Terry Moore represents House District 54 in Billings and is a CPA who worked 35 years in the financial services industry. Sen. Tom McGillvray represents SD 23 in Billings and worked as a Certified Financial Planner.