Inflation is one of the stories of the 2022 Midterms.
There's good reason it should be.
Today, government spending at all levels represents nearly half of the U.S. economy.
All that expenditure means nearly every American receives some form of government benefits. It also comes at a hefty price everyone bares, inclusive of the uncontrolled inflation we are facing today.
It wasn’t always this way.
The first people who received government benefits or government contracts were quite content. Taxes were incredibly low and the government checks people received likely exceeded the taxes they paid.
The U.S. governments of today, however, don’t resemble the governments of even a few decades ago. According to Trading Economics, total government spending, at the local, state and federal level, represented over 44% of the U.S. economy in 2020.
That dipped in 2021 but is climbing once again with the recent Democratic-sponsored spending bill and its over $700 billion in new spending.
With so much spending, no one should be surprised that we have such high inflation nor that it will not go away anytime soon.
Nor should anyone be surprised that the national debt just surpassed $31 trillion.
That debt represents more than 120% of the total size of the U.S. economy.
Worse yet, the Congressional Budget Office (CBO) expects the deficits to average $1.6 trillion from 2023 to 2032.
That estimate, however, doesn’t account for the depths of the recession that are on the way.
Even by the CBO estimates, the national debt will increase by $47 trillion in 10 years — likely 175% of the national economy, if not more.
So, how did we get here?
The answer is simple, since the 1970s, government spending has ballooned.
In 1970, government spending was approximately $321 billion.
Adjusted for inflation, that works out to $2.3 trillion.
Total government spending today is approaching $10 trillion.
In other words, government has grown over 400% since the 1970s.
In the process, all that spending has meant that nearly all of Americans countless numbers of businesses have, and continually receive, government funding.
Since the 1930s we've had Social Security. Since the 1960s, Medicare.
That is 20% of the federal budget. If you add in all of the federal pension/disability and healthcare spending, that soars to 30% of that $10 trillion or nearly $3 trillion.
In 2020, over 69 million Americans get Social Security benefits. Sixty (60) million got Medicare. Fifty-eight (58) Million got Medicaid. Twelve (12) million got military healthcare.
The Education Department spent over $280 billion.
The federal government spent a staggering $700 billion-plus on welfare.
Over $173 billion was spent on government services.
The list goes on and on and includes defense, the department of agriculture and a staggering $377-plus billion on interest.
Nearly $2.5 trillion in spending by the states can be added to that.
Someone or some entity received all of that money.
Indeed, the vast, vast majority of Americans receive some form of government benefits, especially when you consider state-level spending.
When everyone feeds at the government trough, everyone gets hurt.
Among other problems, government spending is far outpacing government tax revenue.
Because that had been happening for so long and its happening in such staggering amounts, the only way to accommodate that spending is through the printing of money by the Federal Reserve.
When the increase in the money supply outpaces economic output, there is a price for that — it's called inflation.
Simply stated, the root of all inflation (economic evil) is excessive spending.
Our current inflation is one of the prices for everyone being at the government's cafeteria — but it's not the only price we pay.
Shortly, we face another hefty price tag, in the form of a deep recession.
The Federal Reserve is in on continuing the recession, which actually began this year.
The Fed believes by cutting demand, inflation will be curtailed.
The Fed’s theory on this is tremendously flawed.
While the recession has already started, the worst of it is yet to come.
When it does, government spending will rise again in the form of unemployment payments as economic output falls. That spending will be deficit spending and the Fed will have to print even more money.
Beyond all of that, the more the government spends, the lower the long-term economic growth rate as taxes and spending sap the private sector resources.
Since the 1950s, U.S. long-term growth has dropped from a 4% annual rate to under a 2% annual rate. During that same period, government spending steadily rose between the 1950s and 1970s and then took off to the 44%-plus percentage of the economy today.
Over time, lower economic growth lowers our standards of living.
It results in the production of less jobs and hurts us all because it results in more government spending.
It is, in fact, a downward spiral.
More spending is not the answer.
Indeed, more people being dependent on the government is not the answer — it's the problem (as Ronald Reagan likely would have said).
If we do not come to understand that soon — we will be like the Eurozone and its even higher government spending, as well as its 0% growth for the last 25 years.
In October, a Rasmussen Reports national telephone and online survey found that 89% of Likely U.S. voters are concerned about inflation, including 64% who are Very Concerned.
Maybe so.
But until people translate that concern into giving up government benefits, the American way of life will continue its precipitous decline
Tom Del Beccaro is an acclaimed author, speaker and national columnist as well as a radio and television commentator. He also appears on Newsmax TV. Read Tom Del Beccaro's Reports — More Here.