Morning Bell: Economic Freedom Is Foundation Of All Other Freedoms

Conn Carroll / January 14, 2011

Next Monday, January 17, is the 50th anniversary of President Dwight Eisenhower’s farewell address. The speech is most commonly remembered for President Eisenhower’s warning about the “unwarranted influence” of the “military-industrial complex,” but often left out of the story is Ike’s warning about profligate federal spending as well: “We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.” Ike went on to call for “balance in and among national programs” including “balance between the clearly necessary and the comfortably desirable.”

The balance of today’s federal budget looks much different than it did during Ike’s time. When Ike spoke, the U.S. government spent 10 percent of or gross domestic product (GDP) on national defense, while Medicare and Medicaid did not even exist. Today, we spend only 4.9 percent of our GDP on defense and 9.9 percent on our entitlement programs (which include Medicare, Medicaid, and Social Security). Clearly, defense spending is not the cause of our nation’s debt problem. Looking forward, the imbalance only gets worse: Defense spending is set to fall to 3.5 percent of GDP by 2015 while spending on entitlement programs is set to consume 100 percent of tax revenue by 2052. The “balance” of our spending priorities has dramatically shifted—and not toward one that favors “the clearly necessary” over the “comfortably desirable.” (more…)