The deficit, in this discussion, is an annual number.  It is the amount that tax revenues are less than spending by Congress.  In other words, Congress is spending six-plus percent more each year than the government can cover by taxing citizens. 

Economist Brain Wesbury on the deficit and debt:

Last week the Congressional Budget Office set out new projections for budget deficits and debt in the decade ahead, and they weren’t quite as bad as they looked last year. The CBO now projects a deficit of 6.4% of GDP in 2033 versus a prior forecast of 7.3%. Total accumulated debt by 2033 is now forecasted to be 114% of GDP versus 119%. None of this is “good” news — deficits and debt would still be too high — but it is “less bad.”

The 6% shortfall is covered by debt, through issuance of Treasury bonds.  That debt costs money, too: last year, America’s debt costs were $750 billion.  That interest cost is added to the overall debt, thereby compounding the cost of spending.  It is called monetizing the debt.  It means you are on the hook.  Did you get much benefit from your debt?  Did you ever agree to pay back $34 trillion in debt?  I didn’t think so.

One might think that a 6% annual deficit (yearly shortfall) isn’t much — until it’s compounded over years and decades.  Congress has overspent for most of the last century.  Our total debt, which accrues to every America citizen today and future citizens, is more than $34 trillion. 

By 2033, the annual cost of that debt will exceed 116% of revenues.  How long can you go on spending 16% more than you make before the lender stops lending?  The nations that buy our national debt, our Treasuries, are the lenders.  We Americans are the borrowers responsible for paying off the debt.  Congress put every one of us into debt without our permission.  Suffice it to say that we private citizens are responsible for paying back this debt, with interest.

Further, we citizens cannot sustain this burden of debt.  Nobody can. 

The very best source for federal tax revenue is expansion in the business activity of every private business and citizen.  Capitalism has taken more people out of poverty than any government, period.  Yet our own government’s spending and debt are crushing capitalism.  The answer is not more taxation; the answer is less spending.

The path taken by all bigger-government politicians will eventually destroy the golden goose — self-perpetuating capitalism — if allowed to continue.  The beauty of our constitutional republic is that we citizens can influence and are responsible for our own government.  It’s not insurrection when we correct our government; it’s patriotism.  Don’t give another penny to any political party or candidate that increases spending by one cent.  Give of your time, voice, and money to any candidate who reduces spending.

We don’t have a lot of time left, but we can reverse this disastrous path to serfdom if we start today.

Jay Davidson is founder and CEO of a commercial bank.  He is a student of the Austrian School of Economics and a dedicated capitalist.  He believes there is a direct connection joining individual right and responsibility, our Constitution, capitalism, and the intent of our Creator.

Image: pasja1000 via Pixabay, Pixabay License.