Articles Tagged As “Debt”:
2545.\\ The Case For Deficits and Against Spending
Just go read it. It makes sense.
Best bit:
"Unseen is how much higher our wages would be if our federal minders weren't spending over $3 trillion per year, and how very different and varied our collective employment outlook would be if our productive gains stayed in the private sector as opposed to the bloated government sector. It's said that government spending is compassionate, but what is compassionate about politicians spending money not their own?
If it's agreed that governments have no resources of their own, would readers prefer a balanced budget of $3 trillion plus, or a trillion-dollar deficit amid $1.5 trillion of spending? The answer here seems pretty simple. Since dollars are dollars, and investors don't seem concerned with the deficit, the most economically stimulative path would be to continue running deficits while greatly reducing the level of federal taxation and spending."
2544.\\ Coming to America: Crisis
Niall Ferguson's article in the Financial Times yesterday cuts to the core of the apparently insurmountable fiscal disaster we face. He repeats Larry Summers rhetorical question "How long can the world's biggest borrower remain the world's biggest power?"
I think it is absolutely fitting that the final implosion of Western Civilization is starting in the very birthplace of liberal democracy. Greece is doomed, that much seems increasingly clear. The dominoes will fall across the Club Med region. Berlin and Paris and London will attempt to right the ship, but it is a matter of rearranging positions in the lifeboat. The ship is lost. Europe has been on the slippery slope for years and is now in a headlong slide down the hill to ruin.
America seems next. Our collapse would make Greece's look like a minor nuisance. It seems pretty clear by now that the current one-term Administration is about as capable and up to the task of saving America as my 4 year old son. Unlike my son, however, Obama lacks modesty. He'll be the one at the helm loudly proclaiming how he, the second coming of Christ, did away with all the terrible things George Bush did as the bridge submerges and the stern rises out of the ocean. The reality is that while we might have been set on course to strike the iceberg by the previous Administration, the current one grabbed the wheel, locked in the course and put us a flank speed all the while loudly strutting and clucking about how great things will be because they took over the captain's chair.
It is, in short, a fast approaching disaster of epic proportions. Forget 1929, I'm talking 476 here. From this inflection point outward in the timeline, we will become a shell, a joke, America in name only. We'll be ruled by oligarchs and corporations and foreign governments, in short the barbarians. Oh future generations will still think of themselves as American, aping our ways and taking our titles, but they won't be any more American than the Ostrogoths were Roman.
Crisis, disaster, my friends, looming ahead. It may already be too late.
****UPDATE:
Von Mises agrees with me at least in part
****UPDATE 2:
And the BBC by way of Breitbart's Big Government
TAGGED AS: America, Debt, Deficit, Disaster, Finance, Financial Times, Niall Ferguson, Politics, Rome
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PERMANENT LINK2539.\\ The Debt Commission
I have some libertarian leanings. I'm not overly conservative when it comes to social matters. I'm not foaming at the mouth, ranting and raving from the lunatic fringe on the right.
More importantly, I hate taxes. I think progressive income taxes are unfair and unconstitutional. Payroll taxes are simply socialist wealth redistribution in disguise. The State confiscates my property routinely and gives it away to others and spends it on some pretty dubious things.
That being said, however, I am also cognizant of the yawning crisis in our nation's finances. That the public debt problem and ongoing budget deficit is the result of outrageous spending on a multitude of things of doubtful utility is reality. Congress seems to think it has no restraint on its power, regardless of who is running the place. Since the 1960s they have spent us into financial ruin. The root of the problem is runaway spending, without a doubt.
However, and I say this wearing my realist hat, there is a zero percent chance that my libertarian idealism in fiscal matters will ever manifest itself in legislation in the current climate. Congress won't ever repeal the income tax, won't eliminate the nanny state, won't abolish the IRS and won't institute a flat tax. Without cutting spending and without increasing revenue, the nation will be bankrupt within a decade. In fact, interest on the debt alone is currently north of 20% of Federal revenue and will be greater than all Federal revenue within a few years if the trend continues. That means if we cut spending to ZERO on everything...defense, government operations, entitlements...everything, then we'd still not have enough revenue to cover the interest on what we owe.
Tell me how that is sustainable. Clearly, it isn't.
So, given that fiscal irresponsibility on the part of politicians got us here, it seems to make sense that we need to invest some other body with powers to help resolve this issue. Yes I am aware that I just made the same case that was made in Rome when Caesar was vested with dictatorial powers. It is also the same case that Napoleon and Hitler made. I'm going to follow it up with another bit of rationale that has been repeatedly used in history to justify all manner of terrible things: desperate times call for desperate measures.
In our case, however, unlike the Roman Republic we still have strong checks and balances between our branches of government. It is extremely unlikely that sufficient power could be gathered into a single place to totally rend the Republic asunder and replace it with something undemocratic. Of course, I could be wrong.
But I have faith in the people of this country. To wit, over the past few months, faced with growing absolutism and rule by fiat in Washington, the people of varying party affiliation rose up and dealt the ruling party a series of electoral blows that ended its ability to ram through its agenda without popular support. Frankly if it came right down to it, and I've mentioned this before, there is always the likelihood of armed insurrection to prevent descent into dictatorship or corrupt plutocracy. I honestly believe that would happen. It happened before in this country and it could certainly happen again.
And so this morning the Senate will vote on whether to form an independent, bipartisan commission to tackle the fiscal crisis. This panel will be composed of various private sector luminaries and former politicians. It will study spending and income at the Federal level and recommend changes with the goal of setting the nation on sounder financial footing. The far left opposes this because they fear the panel will recommend cutting entitlements. The far right opposes this because they see it as a veiled attempt to raise taxes with the cover of bipartisan support. Frankly, both are probably right and to be honest both things have to happen. Taxes must go up and entitlements must be cut.
We cannot grow our way to fiscal solvency at this point. We're so deep in the shit that even 10% annual GDP growth wouldn't pull us out. Yes taxes should be low across the board in normal times. Yes lower taxes increase Federal revenue receipts in normal times. Yes in normal times a great nation such as ours must have safeguards to help those who for whatever reason cannot help themselves. Yes in normal times there is room for a fiscally strong Republic that has world class social programs for the poor and weak. However, these are not normal times. We cannot afford to act as if they are.
We will not get out of debt to our Chinese masters and we will not remain at the top of the global order if we do not address this problem now. It has been estimated that we have 10 years to get our act together before it is beyond all hope. We cannot simply cut taxes to the bone and grow our way out. Reagan did that but at the cost of adding trillions to the debt. Barry O has tried the Keynesian way of spending our way out and it hasn't worked but it has nearly doubled the debt. The reality is that our social programs must be drastically cut and our taxes must go dramatically up.
The first order of business is to cauterize the financial hemorrhaging by ensuring that more money is coming in than is going out. This means ending the bailouts, stopping new entitlement legislation (i.e. Obamacare), instituting an across the board spending freeze, and...get ready...bringing the legions home. Defense spending has to take a hit. Wind down Iraq and get our guys out of that graveyard of empires called Afghanistan. Turn it over to NATO or the reformed Taliban or whomever. I don't care. We can't afford it anymore. Yes it will expose us to risk. Yes it will haunt us in 20 years. All true. But right now we are facing the collapse of our entire Republic and frankly that is a bit more pressing.
Secondly, get the Debt Commission into action. They need to act quickly and get us a report pronto. They must recommend tax increases across the board and major cuts to entitlements. Then they have to follow up with sets of binding recommendations that have to be taken in a yes/no, up/down series of votes in the Congress. Nobody will be happy, but they have to be bold and do the right thing.
Third, a balanced budget Constitutional Amendment and a line-item veto Constitutional Amendment must be taken up with haste. We must enshrine fiscal discipline into the fabric of our system of government and our way of life. The Bill of Rights is meaningless if those natural rights cannot be guaranteed by a solvent, functional government.
I'm not an economist. I'm sure the geniuses like Bernanke and Krugman have all sorts of smoke and mirrors trickery that in theory would make the problem go away. I simply know that we are on an unsustainable path of insane spending and illogical, complex taxation that will ruin us.
Put that in your State of the Union and smoke it.
TAGGED AS: Congress, Conservative, Constitution, Debt, Deficit, Finance, Liberals, Libertarian, Politics, Spending, Taxes
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PERMANENT LINK2499.\\ Even China Doesn't Believe It
When the world's finest purveyors of lies, propaganda, misdirection and outright fraud don't believe the snake oil you're peddling will work, then you've got a major, major problem.
What is more frustrating and depressing is that we're not even having the discussion of whether we SHOULD be doing this kind of health care reform at all. We're simply arguing over minute details about how MUCH we should mortgage, piss away, dump in the toilet. The debate in America isn't about our decline, but how fast we want it to happen.
TAGGED AS: Barack Obama, China, Debt, Deficit, Health Care
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PERMANENT LINK2390.\\ Things Could Be Worse...
You could be one of these people.
Yeah I'm sure going 100 grand into debt for a college degree is totally worth it. Or not.
Shouldn't a degree be free for everyone? Paid for by the rich? Guaranteed even to terrorists in Gitmo?
Or should it be something that you earn and value and leverage and pay for with your own sweat?
Frankly I think a degree and 4 years of college was a complete waste of time and money for me. But hey. I'm not Noble Prize winning economist. Sorry, wrong post.
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