As a candidate for the U.S. Senate, I’m often invited to address various constituent forums on the issues of our day. And although debating with incumbents of renown can be a heady experience, I’ve noticed that regardless of the promises being made, politicians never address the impact (of planned legislation) to growing U.S. budget deficits and our huge national debt.

I don’t mean to bore you with the details, but according to the government’s General Accounting Office, total U. S. fiscal exposure from unfunded entitlements alone exceeds $46-trillion, and our interest payments on the national debt now comprise our fourth largest budget expenditure.

Now I admit that calling for fiscal restraint is unpopular, especially considering: the reconstruction efforts on the Gulf Coast, our two-front war, and the onset of “baby boomer” retirements. But frankly, if we cannot do a better job at belt tightening, our foreign creditors will do it for us.

No longer bound by the gold standard (since 1971), the U.S. dollar is a fiat currency that has no intrinsic value, other than the “full faith and credit” of America. But of late, with our public and private indebtedness now “J-curving,” it’s U.S. creditworthiness that’s being called into question.

Even anticipating currency weakness implies an economy in turmoil, characterized by: the decline of a national manufacturing base, growing asset bubbles, rising loan defaults, and serious balance-of-trade deficits. Does this list of symptoms remind you of any economy in particular?

At this time the U.S. economy is analogous to the “bumblebee”, which according to scientists, shouldn’t be able to stay air borne, based on its weight to wingspan ratio. So what’s keeping us aloft? Consumer spending (generating 70% of GDP growth), spurred by home-equity lines of credit (of $4.6 trillion since 2000) sustain our economic altitude.

Unfortunately, with new home sales slowing and existing inventory at 10-year highs, lower housing values coupled with second mortgages – will soon lead to negative equity for many families. And reminiscent of the boom-to-bust cycle seen in the 2000 stock-market collapse, this latest housing slump may not be headed for a soft landing either.

In other words, the days of using our homes like ATMs are numbered. When taken together, consumer and government debt will soon become such a burden that it can no longer be serviced. And when that happens, expect major economic contractions that result in a prolonged recession.

Long-wave theorists cite the Kondratieff cycle, the latest of which began in 1949, “that has built up with ever increasing levels of debt to income, as politicians deficit spend to win votes and bankers create money out of thin air to enrich themselves at the expense of everyone else.” But while a downturn is inevitable, its extent is still manageable.

Frankly, mild cycles of inflation and recession have always characterized free market economies, but the threat of dramatic and prolonged economic downturns are the bi-product of imbalances created by government intervention and manipulation of a money supply that is not backed by any commodity value.

So in addition to a return to the gold standard, I suggest we start practicing the “Golden Rule.” In economics, the Golden Rule represents an optimal savings rate that’s balanced by consumption. And via tax reform, introducing a flat-consumption tax would also motivate this savings objective.

From another fiscal policy standpoint, the Golden Rule also refers to keeping debt at a “prudent level.” And two ways to exercise better fiscal restraint involve making wider use of zero-based budgeting and slowing the growth of entitlements to the extent they are offset by tax receipts.

Last, from a moral perspective, the Golden Rule speaks to the ethic of reciprocity, or treating others, as we want to be treated. And if the prospect of leaving our children a nation that’s insolvent doesn’t motivate us enough to impose some fiscal restraint, I’m not sure what will.

On the back of the U.S. dollar the Great Seal is pictured with a 13-letter Latin motto that reads, “He has favored our undertaking.” And with God’s help, this generation can secure our nation’s heritage as the land of opportunity for posterity’s sake.

For more information on the challenges, risks, and remedies for national solvency, I invite you to visit http://www.tannerforsenate.com/solvency.htm . Together we can challenge business as usual in Washington by reining-in out of control federal spending.

Annuit Coeptis,

Roy J. Tanner
U.S. Senate Candidate (FL)