Is America heading toward socialism? Is President Obama taking us there? Will the tea party save us?
I think the first question that must be asked is: What will happen if American does nothing? Forget about all the proposals for new government spending. Forget about tax policy for a second. What will happen if America simply maintains the status quo, without growing or reducing the size of government?
According to the Congressional Budget Office’s 2011 Long-Term Budget Outlook, the federal government will consume 34.1 to 75.9 percent of GDP in 2085. The lower number is called “The Extended-Baseline Scenario” while the higher number is “The Alternative Fiscal Scenario,” which includes the extension of the tax cuts set to expire, rising debt levels, and “spiraling interest payments.”
Add in current state and local spending, subtracting out governmental transfers, (that assumes state and local government do not grow, as they have done for the last 100 years) government at all levels will consume 49.7 to 91.5 percent of GDP in 2085.
Even with the CBO’s optimistic forecast, government will account for half of all economic activity. Currently, government accounts for about 40.9 percent of our economy. But the pessimistic outlook from the CBO has the government controlling nearly all of the economy. We will be fully socialist!
Unfortunately, I lean toward the more pessimistic outlook. And I’m not alone. The CBO writes:
Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course.
Looking at the accompanying spreadsheet, the CBO has unemployment falling to an average of 8.4% next year, then falling to 7.6% in 2013, 6.8% in 2014, 5.9% in 2015, 5.3% in 2016, 5.2% in 2019, 5.1% in 2026, and 5.0% in 2030 where it stays forever. Oh really? They really expect unemployment to average 5.0% from 2016 to 2085? Has the United States or any country ever had sustained low unemployment uninterrupted by recession for 70 consecutive years? I don’t think so!
Certainly, the Baseline Scenario is too optimistic. This means that even with no new government programs, government will account for well over half of all economic activity by 2085. In this Alternative Scenario, the CBO estimates that government at all level would consume nearly all of economic output.
Socialism is in our future if we do not change. Doing nothing–merely blocking new government programs–is not enough. We must undo the damage that has already been done and fix the government programs that are already eating up a growing percentage of our national production.
– Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society’s Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July.