In today’s world, the U.S. government can go into debt to finance any program it wishes. From wars and health care to roads and Ferraris, the government can buy whatever it wants without paying for it. But what would our world look like if we actually had to pay for our expenditures?
If every time the government spent money we had to pay for it, the government would have to collect taxes whenever it spent. So, for instance, when the government passed the Troubled Asset Relief Program (TARP) in 2008, it would have cost each working American $3,450.22 (using Congressional Research Service statistics). If we lived in a world where we had to pay for our government’s actions, TARP might have never been passed.
If we had to pay for the entirety of our government’s expenditures, each taxpayer would owe $145,643. Major programs like Medicare, Social Security and many wars would likely be reduced or nonexistent if we were to feel the financial effects of such spending immediately.
If we lived in this world, a cultural shift might take place. When “entitlement” expenditures or “welfare” payments were increased, taxes would increase. People who receive money from the government without working for fair compensation would likely be deplored. This would deter the populace from receiving government money, as they would realize that any money which they accept is taken from someone else. Many would become more independent and perhaps many victims of government welfare would realize that they don’t need the government to thrive.
If this world were a reality, society would further benefit as it would come to realize what is truly valuable. When a person, a family or a nation spends with frugality, they begin to spend money only on important goods. If we lived in a world where we had to pay for what we spend, we might begin to realize that the health, morality, and happiness of our nation are what truly matter. Maybe we would begin to believe that Hollywood, sugar production, and a teapot museum in North Carolina are not important enough to subsidize. In this world where we have to pay for our government’s actions, maybe we learn what really matters.
We will live in this world one day when we our creditors demand payment for what we have borrowed: from entitlements and welfare to defense spending and energy “investment,” all that we have taken for granted will have to be paid back. At this point in time, we will feel the effects of our debt to a much greater extent than if we had been paying our debts all along. We will be forced to cut programs, important or not, and we will not be able to “bail out.”
How we view spending in this country is a major problem because we don’t treat our debt as something that we have to pay. Ergo, we don’t feel the effects of our debt - effects that only get worse with time and interest.
If we begin to treat debt as something that we must be paid, we may benefit in the aforementioned ways. If we don’t, we will pay for our lack of frugality. Once this day of reckoning comes, we might wish that we lived in a world where we had to pay our debt all along.