Spending our way to oblivion
Margaret Thatcher once said that, “the problem with socialism is that you eventually run out of other people’s money”. One could easily add that another problem is that the other people eventually want to get paid back.
It’s a problem that is becoming more real with each passing day. As the interest on that borrowed money consumes more of our nation’s economy, our options and our future will be increasingly limited. The result is a threat to our individual freedoms and economic liberty, and eventually even our national security.
In the last fiscal year federal spending was almost twenty-five percent of GDP, and we now have the biggest annual budget deficit since World War II, (over one and a half trillion). Annual federal government spending in on pace to exceed forty percent of GDP within our children’s lifetimes, and our national debt, (the total of all annual deficits), will triple by 2020.
What will our economy look like after the government raises taxes or inflates the dollar to cover interest payments on our debt? What will our personal liberty or prosperity look like?
The problem, as Reagan used to say, is government. It’s too big and it spends too much, usually in the name of helping people. But does it help anyone if their government goes broke in the process?
More spending on government means more money taken from taxpayers that would otherwise be put to more productive economic ends and grow our economy, thus helping the same people those expensive programs are supposed to help.
The dirty little secret is that when it comes to helping people, the political argument is not over whether or not to help those who truly need it. The debate is over how. And liberals want to do so in such a way that controls options, rather than enables and empowers individuals. They take money, then dole it back out as they see fit. It’s called redistribution, or “spreading the wealth around” as Obama referred to it, and it leads to greed, corruption and gargantuan waste.
But Democrats don’t care, as their aim is to force an eventual increase in taxes in order to fund bigger government permanently. Many liberals are already talking openly about proposing a European style Value Added Tax (VAT), which is a tax on goods and services imposed at every stage of production, and that is invisible to consumers. This would be on top of our current income tax.
But how responsible have the Europeans been with all that revenue from those more comprehensive tax schemes? They’re going over a fiscal cliff, and the Greeks are leading the way.
In Greece, two-thirds of the population receives some form of income from the government, which is why their country is broke and currently being bailed out by fellow European governments. The irony is that those governments are going broke as well.
But when it happens here, who will bail us out? The answer is no one.
According to Federal Reserve Chairman Ben Bernanke, the problem is at our doorstep. In recent testimony to the House Financial Services Committee, he stated, “It’s not something that is ten years away. It affects the markets currently. It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today.”
Within a few years the AAA rating of our bonds (and our ability to borrow money more cheaply) will be gone. Absent an abundance of drunken bond investors, we could become like Greece a lot quicker than people think.
In order to escape the coming carnage many economists are urging the Federal Reserve to monetize the debt, which is the economists’ term for running the printing presses on overtime to print up enough extra cash to pay off the people we owe. The problem is that simply printing more money leads to inflation, which is a back door tax increase of the worst kind. It takes from everyone without the benefit of representation, an issue we went to war over a few hundred years ago. Further, it operates against the very purpose of government, which is to protect your life and your property, (for which money certainly qualifies).
While it is routinely suggested that politics has grown more acrimonious over the years, it hasn’t truly reflected the intensity one would normally expect over such incredible government growth. That’s because, in order to put off the eventual conflict between the makers and the takers, we have borrowed the money to maintain the status quo.
But now, (one is tempted to say thankfully), we’re near the end of our credit line, and a political donnybrook awaits.
Enter the Tea Parties.
(cross-posted at DrewMcKissick.com)