Dead-End Debt Debate

Ilana Mercer, July 22, 2011

What a balanced budget requirement implies is that the government has the right to spend as much as it can take in ~ilana

The economy is in advanced stages of decrepitude due to debt: public and private. Nevertheless, a just-released ABC News/Washington Post poll revealed that 58 percent of self-identified Republicans believe that if their government doesn’t continue to borrow apace, things will get worse.

In legislative language, our wily political pitch men have been granted license to lift the debt-ceiling! Quick-fix quacks in both chambers can now proceed to borrow by further inflating the country’s fiat money supply. Duly, two broad plans have been hatched. These schemes are aimed at saving financial face, more than slashing spending or trimming America’s gargantuan government. To listen to this school of scoundrels—represented by statists from different corners of the political boxing ring, from Fox News’ Stuart Varney to MSNBC’s Rachel Maddow—not to raise the debt ceiling is plain unpatriotic.

The Gang of Six is a bipartisan group. Cross-party consensus results when political expediency trumps principle. No wonder the Gang has President Barack Obama’s stout support. The Gang’s plan, such as it is, is predicated on letting the Obama administration continue its currency counterfeiting and borrowing operations. Their target: to bring “the country’s publicly held debt down to roughly 70 percent of GDP By 2021, which is the level it’s approaching this year.” Billed as a “spending cut,” the Gang’s master plan does not dent government programs so much as it endeavors to diminish the debt (namely money already spent). At a laughable $500 billion over 10 years—$50 billion per annum—the Gang of Six’s Lilliputian gesture won’t cover interest payments owed on the debt, which stand at about $9 billion a day.

Obviously Obama is in his element. Said the president: “The framework that they put forward is broadly consistent with what we’ve been working on here in the White House and with the presentations that I have made to the leadership when they have come over here.”

Did you know that a government worker is more likely to die than get fired? (The data are here.) Supported by serfs in the private sector, oink sector slackers not only earn more on average than the stiffs who finance their life style, but, consequently, live less stressful lives. To maintain these gains in (probable) longevity, the Gang plans to do no more than freeze Congressional pay.

Sounding a similar bum note, the Reid-McConnell duo put on its own debt side-show. True to type, Senate Minority Leader Mitch McConnell (R-Ky.) partnered with Senate Majority Leader Harry Reid (D-Nev). Their solution to leadership’s profligacy? Empower the imperial president to raise the debt ceiling unilaterally.

Then there is the cutely dubbed “Cut, Cap and Balance” proposal, issued by House Republicans. Wise to the tricks of his fellow congressmen, the man who ought to be president, the quixotic Ron Paul, has exposed “Cut, Cap and Balance” for the fraud it is.The plan authorizes “a $2.4 trillion rise in the debt limit,” and puts forth a $1 trillion budget deficit.” In as much as “Cut, Cap and Balance” promises to balance the budget, without “cutting military spending, Social Security, or Medicare,” it is plain pie-in-the-sky.

“These three budget items,” Paul points out, “already cost nearly $1 trillion apiece annually. This means we can cut every other area of federal spending to zero and still have a $3 trillion budget. Since annual federal tax revenues almost certainly will not exceed $2.5 trillion for several years, this Act cannot balance the budget under any plausible scenario.” The answer to cutting the size of government, rather than just denting its debt, is not simply to balance the budget, but to pass “a constitutional amendment to limit taxes and spending.”

At bottom, what a balanced-budget requirement implies is that the state should be permitted to squander however much revenue—now there’s a nice word for taxes—it can extract from its enslaved wealth producers. What a balanced budget requirement stipulates is that the government has the right to spend as much as it can take in.

The “historical average of government outlays as a percent of GDP” is another calibration alluded to by members of the gangs mentioned. Yet more obfuscation. An optimal ratio of OPD (Outstanding Public Debt) to GDP (Gross Domestic Product) gets us away from confining the government to its constitutional mandates. The debt to GDP ratio is a utilitarian, not a constitutional, concept.

The politicians are posturing about living within the confines of the constitution. Alas, like a yeti or unicorn, a constitutional government is a mythical creature that is unlikely to materialize anytime soon. The political poseurs should be reminded that there is nothing constitutional (or just) about fine-tuning—increasing or decreasing—state spending to coincide with a supposed sovereign people’s acquisitive abilities and economic energies.

In their agreement to “change the trajectory of our debt”—the words of Democratic gang member Sen. Kent Conrad—the gangs and their gimmicks are like bank robbers who’ve planned a string of bank heists, but then decided, charitably, to spare one or two.

July 22

* Debt-Screen-Pic-Courtesy-GettyImages.

CATEGORIES: Barack Obama, Debt, Democrats, Economy, Federal Reserve Bank, Individual rights, Inflation, Republicans, Ron Paul