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ICYMI: Rep. McClain in Townhall: How big is Uncle Sam? How large can he get?

March 23, 2021

WASHINGTON, D.C. –Today, Congresswoman Lisa McClain (R-MI) penned an op-ed in Townhall alongside Dr. Timothy Nash titled, “How big is Uncle Sam? How large can he get?

Click here or read below for the full op-ed.

The Economic Policy Institute’s Working Economics blog on July 16, 2020 posted an article by Josh Bivens entitled “Recovering fully from the coronavirus shock will require large increases in federal debt – and there’s nothing wrong with that.”  This quote troubled us then, and troubles us even more now given the events of last week, especially March 11, 2021. 

At the end of Q1 2020, the annual U.S. GDP growth forecast by most economists anticipated a decline of negative 6.5 percent, which would have made it one of the worst years in U.S. history. However, a resilient U.S. economy realized extraordinary Real GDP growth of 33.1 percent for Q3 2020 with the economy achieving 4.0 percent real growth for Q4.  The U.S. economy’s great strength over the last nine months is something no economist predicted when the COVID-19 recession became obvious last March.  Thanks to this remarkable second half recovery, the U.S. economy contracted only 3.4 percent in 2020.  This recovery is clearly a testimonial to tax and regulatory reform begun by the Trump administration and Congress in 2017 and the strong foundation the economy has shown since. But, if spending is not brought under control, our economic future becomes increasingly tenuous.

Pork, Pork, Pork.

On December 22, 2020, The New York Times reported in an article titled “Congress’s Big Christmas Tree Bill” that the U.S. Congress had approved a spending bill providing a new round of economic stimulus to help millions of Americans struggling due to the COVID-19 pandemic. “Christmas Tree legislation” refers to the ability of members of Congress to attach an unrelated provision or “ornament” to a bill. Pet pork projects added in this case included $40 million for the Kennedy Center in Washington, D.C., $1 billion to expand the Smithsonian, and $25 million to combat invasive Asian carp.

The full details and text of the 5,593-page bill and its $2.3 trillion price tag – among the largest ever – were released a few hours before the votes were held on December 21st.  The process and timing greatly frustrated most members of the House and Senate, yet enough saw fit to vote for it that it reached President Trump to be signed into law.

In addition to the approximately $900 billion dollars to address the pandemic, the bill included $1.4 trillion to keep the government running through September.  

Legislating expenditures without revenues to fund the initiatives is known as “deficit spending.” We truly believe deficit spending is out of control.  Consider, it took the U.S. 205 years (end of fiscal year 1981) to tally a National Debt of $998 billion dollars.  At the end of fiscal 1981, the total U.S. National Debt was roughly 31.1 percent of U.S. GDP.  For the fiscal year ending September 30, 2020 U.S. GDP declined slightly YOY to $21.17 trillion dollars, while our national debt climbed to roughly $26.94 trillion dollars, or an astounding 127.3 percent of U.S. GDP.  This debt equates to more than $83,000 per U.S. citizen or $220,000 per U.S. taxpayer.  If the excessive governmental gift-giving at Christmas wasn’t enough, less than three months later on March 11, 2021, President Biden signed into law the $1.9 trillion American Rescue Plan, calling for dramatic increases in government spending and government bailouts of much of the economy with little actually going to fight the COVID-19 pandemic.  We believe that most of this spending is unnecessary and wasteful especially considering the International Monetary Fund’s World Economic Update released in January 2021, which points out that U.S. GDP outpaced the world (-3.5 percent GDP) and outperformed the advanced economies of the world dramatically (-4.9 percent GDP), and Europe (-7.2 percent GDP) in 2020.  The IMF report calls for the U.S. economy to be among the top performers again in 2021, achieving 5.1 percent real GDP growth for the year.  With the clear majority of the $1.9 trillion being unnecessary and political in nature, the U.S. National Debt now stands at $28.08 trillion, the average debt per citizen just under $85,000, with the average debt per taxpayer now at roughly $224,000, while the national debt as a percentage of GDP is now 129.85 percent. 

Considerations:

In our opinion, the 117th Congress should consider the following measures immediately:

  1. The name of any Congress member who authors a special interest Christmas tree ornament or rider to legislation should be made public.
  2. Resolve to end the practice of riders or Christmas Tree legislation.
  3. Develop a balanced budget amendment like those already in place by 49 of the 50 U.S. states (except Vermont).
  4. Pass a law prohibiting the U.S. National Debt to GDP ratio to exceed a pre-determined percentage, as determined by a Congressional task force made up of citizens, and government and private sector economists.  The law also would require Congress to either cut spending or raise taxes if the actual ratio exceeds the agreed-upon percentage. We believe the ratio needs to be well below 100% by 2030.

Conclusion

If the U.S. is to remain flexible and the dominant global economic power, let alone be able to handle needed infrastructure bills, a pandemic, or a military crisis, it cannot do so with a National Debt to GDP ratio approaching that of a third-world country.  What we find especially unacceptable is the current pace of growth in our national debt.  How do we justify adding more than $1 trillion to our national debt in less than three months, while taking our national debt to GDP Ratio from 127.3 percent to 129.85 percent in less than six months? This insatiable appetite for spending in Washington, D.C., must end, or we will bankrupt this great country.  The new administration seems likely to increase spending making recent yearly deficit growth seem like child’s play based on their discussion of proposals for funding the Green New Deal and highway infrastructure.  As we end the first quarter of 2021, we would all do well to focus on the massive debt burden and inflexibility we are creating for all Americans, especially our children and grandchildren. We MUST figure out a way to rescue the country from our growing debt burden!

Congresswoman Lisa McClain represents Michigan’s 10th Congressional District in the United States House of Representatives. Dr. Timothy G. Nash is the director of the McNair Center for the Advancement of Free Enterprise and Entrepreneurship at Northwood University.

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