Opinion: Americans unprepared for consequences of freewheeling federal spending

Photo/Haiyun Jiang/The New York Times / House Speaker Kevin McCarthy, R-Calif., speaks to reporters during a news conference in Statuary Hall on Capitol Hill in Washington on Thursday, Jan. 12, 2023. McCarthy has said it is President Biden and his allies who are acting recklessly about the debt ceiling.

While waiting at a red light one day, my then-4-year-old son piped up from his car seat, "Mommy, the government should give everyone a dolphin."

Yikes. How did my 4-year-old come to think of the government as a fairy godmother that could create things out of thin air?

Unfortunately, it's not just 4-year-olds, but also 40-year-olds who increasingly think government spending comes out of nowhere and is without consequence.

Recent polls by the Cato Institute find that a strong majority of Americans support government-provided things -- but once the cost is revealed, their support plummets. Yet all too often, government programs are sold to the public without a per-household price tag.

Social Security and Medicare are prime examples of government programs that gained passage and support based on their promised benefits with little regard for their costs.

Consequently, both programs have amassed $73 trillion in unfunded obligations. That's equal to $560,000 per household. And it's a safe bet that few people would support preserving them in their current forms if it meant paying an extra $560,000 on top of the Social Security and Medicare taxes they already pay.

A more recent 2022 Cato poll found that 64% of Americans support the federal government forgiving up to $10,000 in federal student loans for people who make less than $150,000 per year and married couples who make less than $300,000. But when told about the actual costs, support cratered. Only 36% of respondents supported loan forgiveness if it would raise their taxes. At a cost of roughly $500 billion, it almost certainly would.

If forgiveness were to lead to other likely consequences, such as encouraging colleges to raise their prices and causing more employers to require college degrees, only about a quarter of Americans would support it.

Supporting such expansive programs without even knowing the costs seems irrational. We don't buy groceries or cars or take vacations without knowing the price and the trade-offs.

The disconnect between how Americans handle their own personal finances -- where buying an expensive home and failing to pay the mortgage will land you on the streets -- and their views of government spending has some logical rationale, though.

The hidden consequences of excessive government spending and exploding debt -- things like a smaller economy, lower incomes and slower technological growth -- aren't apparent because we only know what we have experienced and not what could have been.

Additionally, the future unresolved consequences of that spending and debt are decidedly negative: How could over $230,000 of total government debt per household -- debt that must eventually be repaid -- not burden younger and future generations?

Yet those consequences are similarly unapparent because we don't know when our patently unsustainable fiscal situation will become practically unsustainable nor what and how severe the consequences will be.

Low interest rates and a relatively strong economy have eased the current burden of excessive U.S. government spending and exploding debt, but at the cost of generations of Americans who've been conditioned to believe in a false reality that will eventually come back to bite them.

Policymakers need to treat taxpayers' money like their own and the federal budget like their household budgets. They can start by looking at solutions like The Heritage Foundation's Budget Blueprint, which provides nearly 200 recommendations on how policymakers can balance the federal budget, reduce the government's drain on household incomes and help promote fiscal sanity -- for 4- and 40-year-olds alike.

Rachel Greszler is a senior research fellow at the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation.

Tribune Content Agency