Monday, December 31, 2012

Is There a Silver Lining in the Fiscal Cliff?

 With the President and Congressional leaders at an impasse in their negotiations to reach a deal that would prevent our nation from going over the “fiscal cliff” by January 1, it is looking more likely that big tax increases are coming to our citizens and federal spending in our state will be reduced.

I am angered at the likelihood of tax increases on our citizens for no other reason than Congress has for years failed to live within its means and now needs more revenue to pay for services it has no business providing in the first place.

At the same time, I am hopeful that this event will trigger a reduction in federal spending on state programs.

In 2011, state spending reached an all-time high of $16.6 billion, with nearly half of that coming from the federal government in the form of grants and discretionary spending.

In case you haven’t been paying attention, the federal government is broke!

Approximately $1 out of every $2 the federal government spends is borrowed from other nations. Our current federal budget deficit – the difference between what we received in revenues and spent – is more than $1 trillion. Our current national debt – the amount we have borrowed and must repay – is now more than $16 trillion.

But that number is only partially true. Because of an accounting gimmick where governments pretend future liabilities don’t exist and, therefore, don’t account for them, most Americans don’t know how big the problem really is. The amount typically reported – more than $16 trillion – is actually only the surface of our debt.

According to a June 2010 article in National Review, America’s total debt – when accounting for unfunded future liabilities in Medicaid, Medicare and Social Security and state and local bond debt – exceeds $130 trillion.

Take a moment for that to sink in. $130 trillion.

Now consider this: Currently, there is only approximately $60 trillion in circulation throughout the entire world.

When you consider that our federal government owes more than twice the amount of money that actually exists throughout the world, shouldn’t you question why the same government continues to borrow money and spend it on marginally useful state programs?

If no deal is reached, there will be some relatively minor cuts in federal spending.

According to the Oklahoma Office of Management and Enterprise Services, federal spending in Oklahoma will be reduced by approximately $137 million as a result. I recognize that is only a drop in the bucket compared to nearly $8 billion in annual federal spending in Oklahoma, but every little bit counts.  After all, they are your hard-earned tax dollars.

The truth is, the awareness and discourse we are having as a nation about federal spending that has consumed us as we head toward the fiscal cliff is actually more helpful that the minor cuts in federal spending we will see if we actually go over it.

If there is a silver lining in this mess, I believe that is it.

It is an honor to serve as your state representative. If you ever need anything, call my state Capitol office at (405) 557-7349. Have a Happy New Year!

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