Marketplace of Ideas Blog

If those who favor higher government spending and taxes think the resulting anger is going away, they appear to be wrong.

The American Family Association claims to be holding more than 1,100 TEA parties on Independence Day, including in Kaukauna, Manitowoc and Suring.

Ignore the more than $2 billion in tax increases (votes for which apparently were secured through earmarks) our elected officials in Madison are about to foist upon us. Instead, read this:

In testimony before Congress in January 2001, then-Federal Reserve Chairman Alan Greenspan repeated earlier cautions about the wisdom of entirely paying off the debt, which then stood at $5.7 trillion. When Greenspan spoke, the federal government had been running budget surpluses for three years and the Congressional Budget Office was projecting that surpluses would exceed $800 billion per year between 2008 and 2012.

In acquiescing to a Bush administration proposal to use the surpluses to cut taxes, Greenspan argued that the absence of a market for Treasury securities might compel the government to take stakes in the private sector, which he viewed as worse than maintaining a manageable debt.

Such a theoretical exercise might strike you as amusing in light of the nearly $5 trillion now projected to be added to the national debt by 2012.

The stunning erosion in the government's fiscal position cannot be blamed entirely on the credit crisis and its aftermath.

As recently as June 2008, U.S. government debt totaled $9.3 trillion, an increase of about 70% from seven years earlier. Even before the stimulus package was enacted in February, the deficit for the current fiscal year was expected to be the largest percentage of Gross Domestic Product since 1946.

Looked at another way, the United States has gone from anticipating annual surpluses of $800 billion to expecting annual deficits of $1.2 trillion for the 2009–12 period.

This nation is accumulating record levels of debt however you measure it:

At 12% of GDP, this year's deficit dwarfs the 5% to 6% deficits racked up in the early Reagan years. Only during World War II, when federal shortfalls averaged an astounding 20% of GDP, has Uncle Sam spilled more red ink.

Accumulated debt also is near the high end of the historical range.

Total government indebtedness averaged just 32% of GDP between 1920 and 1940 before spiking to 113% by the end of World War II. That number declined gradually over the next three decades, reaching a low of 33% in 1981.

When the financial crisis erupted last fall, however, government debt already was back to 70% of GDP. Under current assumptions, it could hit 90% by 2012.

Even with government spending propelling those kinds of debt percentages, for some, our current (ridiculously excessive) level of government spending isn't enough. That "some" includes a group called Citizens for a Stronger Oshkosh, along with another group previously referred to in this space, the Institute for Wisconsin's Failure — I mean Future. As the Oshkosh Northwestern reports:

A list of 10 alternative revenue sources, which would amount to $2.2 billion in additional money for the state by 2011, were given to attendees and rated as positive or negative. ...

The most popular among the group included: spending $15 million to hire additional Department of Revenue employees to collect an estimated $85 million in unpaid taxes and increasing the beer and alcohol tax to bring $40 million in revenue by adding 11 cents on to a 6-pack of beer. The majority also supported increasing the state sales tax from 5 cents per dollar to 6 cents per dollar, which would amount to a state increase of $847 billion.

(I wonder what the reaction would have been had I stood up in the meeting and proposed, instead of these tax increases, reducing the government workforce by, say, one-third.)

Never in this state's history has increasing taxes not directly led to increasing government spending. (Whichever came first, the spending chicken or the tax egg, the result has always been the same.) In addition, never in this state's history has increasing a tax to reduce another tax — usually property taxes — reduced taxes. Recall that the state sales tax was initially set at 3 percent to reduce property taxes, then increased to 4 percent to reduce property taxes, then increased to 5 percent to reduce property taxes, after which counties were allowed to add a 0.5-percent sales tax to reduce property taxes ... you get the idea.

Much as I would not suggest ruining Independence Day with politics, I hope the TEA parties succeed. Our elected officials aren't listening.