Spending Our Way to Prosperity?

Remember the good ole days when the United States had a “good, lean budget” of only $2.57 trillion? That’s how former President Bush described the spending plan he submitted to Congress in 2005. How anyone can describe a budget that adds $330 billion to the deficit as a lean budget is beyond us, we wrote at the time.

This week, President Obama unveiled his $3.8 trillion budget blueprint for the next year—an astronomical fund that is 48 percent more than what the White House submitted just five years ago. The budget calls for another record-shattering year of deficit spending, now projected to be $1.56 trillion.

Incredibly, not unlike his predecessors, President Obama says his new budget eliminates waste, freezes spending and makes painful cuts. “It’s time to hold Washington to the same standards families and businesses hold themselves,” the president said the day he released the new budget. “It’s time to save what we can, spend what we must, and live within our means once again.”

When he says it’s time to save, he doesn’t mean now, during the worst economic downturn since the Great Depression. His plan is to reduce deficit spending after the recession—whenever that is. In fact, many politicians and economists are now on record saying that because of the recession, the United States has no choice but to spend more.

“We’re not going to save our way out of this recession,” House majority whip James Clyburn, a South Carolina Democrat, said on Monday. “We’ve got to spend our way out of this recession, and I think most economists know that” (emphasis mine throughout).

Spend our way out of a financial crisis—it’s not exactly the economic theory we learned from our grandfathers. And it’s certainly not grounded in Scripture, which contains this little tidbit of wise financial advice: “[T]he borrower is servant to the lender” (Proverbs 22:7).

Representative Clyburn’s comment reveals a painful truth—something the Trumpet has been saying for nearly two decades. Because of America’s addiction to credit, its skyrocketing deficits, out-of-control spending, mass printing of paper money, runaway inflation, crushing taxation, and bloated and expanding welfare programs, this nation is well on its way to becoming a third-rate world power.

Even staunch supporters of President Obama’s agenda, like the New York Times, seem concerned about America’s eroding influence around the world. “By President Obama’s own optimistic projections,” the Times wrote earlier this week, “American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 … they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.”

The Times wonders, “How long can the world’s biggest borrower remain the world’s biggest power?”

When theTrumpet.com analyzed the Bush administration’s outrageous budget proposal of 2005, the national debt was pushing $8 trillion. Right now, it’s well over $12 trillion—and with a trajectory of additional debt growth so steep, it’s without precedent.

Yesterday, the House of Representatives voted to increase the debt ceiling by another $1.9 trillion, which raises the cap to $14.3 trillion. That incomprehensible deficit hike, which only covers Washington for about another year, amounts to about $6,000 for every American.

Is it any wonder why Moody’s Investors Service is warning the U.S. that it may lose its aaa credit rating if it doesn’t rein in deficit spending?

Yet, many of America’s leaders actually believe the only way out of this financial mess is to spend more. And spending more hasn’t even provided the short-term relief many had hoped for.

And it certainly hasn’t addressed the cause of the problem. According to Fox Business, the government’s top bailout cop, Neil Barofsky, recently said that after 15 months, Washington’s $700 billion “stimulus” plan had not addressed the “fundamental problems that triggered the crisis, leaving the financial system vulnerable to another collapse.”

In a 224-page quarterly report he submitted to Congress, Barofsky said the bailout plan “will have been for naught if we do nothing to correct the fundamental problems in our financial system and end up in a similar or even greater crisis in two, or five, or ten years’ time.”

What all this amounts to is another, even bigger, ticking time bomb that is set to explode.

On Monday, after defending his $3.8 trillion “rescue” package, President Obama said, “We simply cannot continue to spend as if deficits don’t have consequences; as if waste doesn’t matter; as if the hard-earned tax dollars of the American people can be treated like Monopoly money; as if we can ignore this challenge for another generation.”

Which is exactly what America continues to do, even in the worst possible economic climate: spend more, borrow more, print more money—and act as if there won’t be catastrophic consequences in the end.