Tag: deficits

Categories
national politics & policies too much government

Cold, Hard Reality

Yesterday President Obama declared that no one is arguing for government default. But isn’t it amazing to see so many politicians work so hard to ensure that un-​argued-​for goal?

There are two parts to a default. The first is running up debt; the second is not paying it back. Like it or not, advocate it or not, sovereign debt repudiation comes closer as American politicians lumber on with the first part.

Of course, there are folks who think the American people should simply repudiate their government’s debt. Over at the Mises Institute, Justin Ptak provides citations from more than one economist advocating just that.

Gary North states that the day is fast approaching when the phrase “full faith and credit of the United States government” will “provoke universal laughter.…” He insists that “the credit rating of the United States government will be marked down from AAA to AA. It will then be marked down to A.” What’s more, he says this is a good thing: “For every notch down that it falls, the national day of deliverance draws closer.”

Paranoid? Fringe? Hopeful? No matter how you categorize such talk, it’s not crazy to think about, since the probability of default grows as the debt increases.

A default could have a beneficial effect on America’s politicians: They would be unable to finance further deficits. Reality’s cold, hard fist — that is, un-​amused investors — would rein them in.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies responsibility

Deficits Matter Morally

There are two things I don’t understand. 

Actually, there are many things I don’t understand, but what I’m thinking about, now, is how one can honestly defend massive government deficits in one of the two usual ways. 

The first defense became a cliché while I still wore footsie pajamas: Deficits don’t matter because we owe the debt “to ourselves.”

The truth? More complicated. Some people buy debt; others don’t. Were we to “forgive us our debts” (to appropriate a familiar phrase), we wouldn’t be forgiving what we owe “us,” but what the “U.S.” owes just those investors who’ve bought that debt. 

And not even “everybody” owes the debt, since the taxes that would be collected, extra, to pay the debt might not come out of your pocket, or mine — it’ll come out of those pockets, over there. (Of course, you’re probably thinking, “I should be so lucky!”)

No wonder government debt is so tempting. On the surface it’s all inclusive. “We’re all in this together.” But beneath, it’s some folks trying to get one over on other folks.

Nasty, eh?

Then what about today’s excuse: “We owe it to folks overseas.” Since much of our governments’ debt gets bought up by investors abroad, we don’t have to worry about it because …

The unspoken thought is: “We’ll just renege on our promises.” Not pay it. Screw them.

Simple truth: Apologists for growing deficits flirt with mass theft from the government’s creditors.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

Economics vs. Politician-​Incurred Debt

For several years now I have worried — here on Common Sense and on Townhall — about the unsustainability of politician-​incurred debt.

I’ve used the word “unsustainable” quite a few times. But too often I’ve simply called it “government debt.” I think I like “politician-​incurred debt” better. For it’s politicians who have been unable to keep from over-spending.

And pretending that the consequent problem of debt is “impossible to solve in the current political climate.”

They’re wrong, of course. The “current political climate” is whatever people think and speak right now. Change the way we think and speak, and suddenly the impossible becomes possible.

But what do economists say?

Economists are notoriously able at the higher maths, such as simultaneous equations, symbolic logic and regression analysis. But the number of economists unfazed by the simple calculations to figure debt load and maintenance is almost as frightening as those figures.

Luckily, those ready to do the arithmetic of public debt are on the rise.

Take economist Veronique de Rugy.

Writing in Reason magazine, de Rugy succinctly offers up the numbers. America’s trillions in debt now surpasses half of Gross Domestic Product. Politician-​incurred borrowing increasingly soaks up the limited capital available, undermining market recovery. She says politicians must “reform entitlement spending, put both military and domestic spending on the chopping block, and start selling off federal assets. Better to do it now than during a fire sale later.”

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

Commiserations on Tax Day

It’s April 15, my eldest daughter’s birthday. I used to tell her she wouldn’t have to pay taxes like everyone else, because IRS folks wouldn’t dare make her file on her birthday, would they?

Seriously, when it comes to family and taxes, I’m just glad that my wife does all the work. 

My job is getting the birthday cake.

You can understand why I’d shirk the tax work. There are 40,000 sections to the tax code, and no one understands it all.

This complexity has costs. And not just to my sanity. A whole industry has risen to ease the burden of figuring out our taxes. One hates to begrudge anyone an honest living, but really, most of today’s tax accountants would better serve humanity in some other job.

Simplifying taxes should be as important as tax reduction. Instead, because our representatives and our president just cannot stop themselves from spending more and more of our money, they are raising taxes. It’ll be on the proverbial rich, in the immediate future, but they won’t stop there.

They can’t stop there. 

Why? Because if you took all the wealth — not just the income, but all the wealth — from every millionaire in the country, you still couldn’t pay all the future obligations of the federal government.

My darling daughter aside, April 15 is no day to celebrate. It’s tax day, and it marks the degradation of our nation at the hands of our politicians.

This is Common Sense. I’m Paul Jacob.

Categories
Accountability initiative, referendum, and recall

Ionosphere Laughter

Government is a business — a big business, employing more people than any other. It dominates by regulating, restricting, taxing and subsidizing. 

Government is also “too big to fail,” which is why, increasingly, politicians and public employee union bosses have ascended to the top of the heap of a growing army of competing lesser groups, always asking — no, demanding — more money. 

This growing sector depends not on the decisions of dispersed customers and donors and investors, but on decisions concentrated in Washington, and, to a lesser extent, the state capital … and city hall. 

The federal boys splurge far over their revenues — by the trillions, beyond the Ionosphere — courtesy of foreign creditors and the printing press. Governments at the state and local level tend to be more restrained, existing nearly on the same level as the rest of society, in a sort of Stratosphere (if not Troposphere) of finance. 

Indeed, they are constitutionally forced to balance budgets, can be limited in their power to tax, and are not allowed to print money. Often, they must even ask voters for permission to borrow. 

Add on the initiative and referendum, and we can gain some control over governments closest to home. 

Not so at the federal level, where often the only effective response to government corruption and excess is a sort of recycling program by late-​night comedians. 

This makes our laughter at national politicians a tad bittersweet. Or just bitter.

This is Common Sense. I’m Paul Jacob.