Acton Commentary

The Moral Bankruptcy Behind the Bailouts


South Carolina's Governor Mark Sanford has some advice for government's spending problem, "When you're in the hole, quit digging." It's a blunt message that warns us not to let moral weakness aggravate financial trouble.

Across the country many American families, corporations, and small businesses are trimming their budgets in this economic downturn. Last year on the campaign trail, President Barack Obama noted in moving fashion how some employees were sacrificing by voluntarily cutting their hours so that other co-workers could keep their jobs.

These responses are models of sacrifice, displays of spiritual strength in the face of material weakness. Despite such examples, government, somehow immune from this wave of maturity and responsibility, has decided to spend and borrow more than ever before. The new trend of borrowed stimulus bills and bailouts only exacerbates a spending crisis already out of control.

This is bad news for the American taxpayer and even worse news for the quality of life of future generations. Every newborn in America is already on the hook for $175,000 in unfunded government promises. Simply put, the American dream is at risk for future generations.

The stimulus bill currently before Congress highlights the unsustainable spending pace of the federal government, which is propelling us closer to an even greater moral and financial crisis. Former U.S. Comptroller General David M. Walker says that without fundamental changes to spending, the United States could go bankrupt in one generation. Walker noted, "This is not just about numbers, we are mortgaging the future of our children and grandchildren at record rates, and that is not only an issue of fiscal responsibility, it is an issue of immorality."

If enacted, the stimulus bill would top $1 trillion in expenses when interest is added. "The nation borrowed $800 billion between the Revolutionary War through Gerald Ford's presidency," U.S. Congressman Gene Taylor (D-MS) observed. "In one vote, the nation is going to borrow another 800 billion. This is nuts."

Long an opponent of bailout and stimulus legislation, Governor Sanford took the unusual step of going to Washington in October of last year to beg the U.S. House Committee on Ways and Means to stop a $150 billion stimulus bill, declaring that his state didn't want any of the money. Almost every other governor, even self-described conservatives, have already lined up for yet another cut from the federal treasury. "Essentially, you'd be transferring taxpayer dollars out of the frying pan - the federal government - and into the fire - the states themselves," says Sanford. Sanford's point is that state spending is increasing at an even faster pace than federal outlays. State debt across the country has increased 95 percent over the past decade.

In New York, the governor has proposed 137 tax increases or new taxes altogether on things like movie tickets, cab fares, iTunes downloads and non-diet soft drinks, all to keep up with budget increases. Opponents have described the initiative as a laundry list of nanny state taxes and fees. California has delayed tax refunds to its residents, simply because no money is available.

Governor Sanford has been on a mission to highlight the fact that genuinely stimulating the economy means making sure the country's finances are on stable ground so that entrepreneurs and future Americans are not paying for risky quick fix schemes for generations. He told the Heritage Foundation, "I think God puts us all here for a reason, and mine in this chapter is to try and slow government's growth."

Sanford has even sparred over the size and growth of government with the General Assembly of his home state--many of them lawmakers in his own Republican Party.

The never ending tide of federal bailouts is only delaying the inevitable restructuring that is needed. "I think that this is the biggest gut check we've ever had as a country, where do we go next, towards a politically based economy or a market based economy?" says Sanford. Put another way, do we take responsibility for the mess that we have created, or do we shirk our duty and pass the bill down the line?

Many fellow governors and lawmakers may never buy into Sanford's ideas about free markets, privatization, and the value of limited government, but they may be forced to heed some of his warnings and reform government's cost structure out of sheer necessity.

Or they could ignore the warnings, continuing down a path that may usher in an even greater financial crisis. That would be a failure of economic policy, yes, but even more grimly a demonstration of moral cowardice.


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