At the risk of mixing metaphors, we should think of the fiscal cliff as the Ghost of the Fiscal Future. It is a bleak lesson in what awaits us if we don’t get serious about changing course.
Mitchell goes on to hint at the serious issue of intergenerational justice that our government’s current fiscal behavior will affect if it continues unchanged:
The non-partisan Congressional Budget Office [CBO] now projects that, absent policy change, when my two-year-old daughter reaches my age (32), revenue will be just a bit above its historical average at 19 percent of GDP while spending will be nearly twice its historical average at 39 percent of GDP. This is what economists mean when they say we have a spending problem and not a revenue problem: spending increases, not revenue decreases, account for the entirety of the projected growth in deficits and debt over the coming years.
As it stands, we continue to make unrealistic promises to future generations. Indeed, as Jordan Ballor has noted,
The last year the deficit was under $1 trillion was 2008, when it measured $642 billion, which at the time was the largest deficit in American history. As significant as the fiscal restraint imposed by the cliff is, however, it would not quite get us back to even those historically high levels of expenditure.
He goes on to say,
In fact, the debate over sequestration is likely to obscure the more pressing and long-term matters facing this country, particularly the intertwined demographic and entitlement “cliffs” we face in America and more sharply across the globe. Christians, whose citizenship is ultimately not of this world and whose identity and perspective must likewise be eternal and transcendent, should not let our viewpoints be determined by the tyranny of the short-term.
Or, as Mitchell puts it, “if we fail to reform, the fiscal future will make January’s fiscal cliff look like a fiscal step.”
But what lessons can we learn from the “Ghost of Fiscal Future”? He lists three that I will highlight here. First,
As spending outstrips revenue, each year the government will have to borrow more and more to pay its bills. We have to pay interest on what we borrow and these interest payments, in turn, add to future government spending.
When the government borrows to finance its spending, it will be competing with my daughter when she borrows to finance her first home or to start her own business. This means that she and other private borrowers will face higher interest rates, crowding-out private sector investment and depressing economic growth.
The CBO no longer projects out beyond 2042, the year my daughter turns 32. In other words, the CBO recognizes that the whole economic system becomes increasingly unsustainable beyond that point and that it is ludicrous to think that it can go on.
Thus, at our current rate, we have about thirty years before a fiscal earthquake, fiscal tsunami, fiscal meltdown, or whatever other apocalyptic metaphor we end up settling on. Our current rate of borrowing increases our interest, which in turn increases our spending. If such government borrowing continues it will end up “crowding-out private sector investment and depressing economic growth.” And by the year 2042, fiscal fire and brimstone will rain from fiscal heaven.
And we cannot simply put off this problem until then:
What’s more, if Congress waits until then to make the necessary changes, it will have to enact tax increases or spending cuts larger than anything we have ever undertaken in our nation’s history.
With how upset everyone is about the indiscriminate tax increases and spending cuts of the fiscal cliff, I cannot imagine how our country will face such a fiscal future. But, according to Mitchell, there is still hope:
For all the gloom and dread, the Ghost of Christmas Yet to Come was Scrooge’s savior. In revealing the consequences of his actions—and, importantly, his inactions—the Ghost inspired the old man to take ownership of the “Time before him” and to change his ways.
Let us hope that our nation’s leaders will learn to do the same. In the meantime, however, each of us can do our part—which may be just as important—by adopting a more ascetic mindset, consistent with a traditional Christian ethos, that embraces personal austerity for the sake of greater community and generosity in our homes, families, and other networks and contributes to rendering such extensive and unsustainable government spending far less necessary in the future.