Does Government Debt Really Matter?
Does Government Debt Really Matter? by Dennis Miller – The Burning Platform
The numbers on the US Debt Clock are spinning at a dazzling pace. US government debt is now over $21 trillion, $174 thousand per taxpayer. Add another $3 trillion for debts of state and local government on the stack.
Unfunded federal government promises are almost $113 trillion, $900,000 per taxpayer, not including another $6 trillion in state unfunded pension liabilities.
It’s fiscally impossible for the debts to be repaid. Governments borrow money and make political promises on the backs of future generations. If the numbers were double (or triple) what they are today; would our lives be any different? We can’t pay it back, why not just continue frivolously spending as long as people are fool enough to lend us money?
Does anyone really care?
Ignore the political class and their allies. Here is an example.
Nobel Prize winning economist Paul Krugman has an impressive educational pedigree – on paper. While he may be an economics professor at Princeton and the London School of Economics, he tarnishes the reputation of all economists, putting politics ahead of common sense.
In October 2016, anticipating the election of Hillary Clinton, he wrote, “Debt, Diversion, Distraction”.
“Are debt scolds demanding that we slash spending and raise taxes right away? Actually, no: the economy is still weak, interest rates still low…and as a matter of macroeconomic prudence we should probably be running bigger, not smaller deficits in the medium term.(Emphasis mine)
…. So my message to the deficit scolds is this: yes, we may face some hard choices a couple of decades from now. But we might not, and in any case, there aren’t any choices that must be made now.”
After the election, Mr. Krugman reversed his position writing, “Deficits Matter Again”.
“…. Eight years ago, with the economy in free fall, I wrote that we had entered an era of “depression economics,” in which the usual rules of economic policy no longer applied…deficit spending was essential to support the economy, and attempts to balance the budget would be destructive.
…. But these predictions were always conditional, applying only to an economy far from full employment. That was the kind of economy President Obama inherited; but the Trump-Putin administration will, instead, come into power at a time when full employment has been more or less restored.”
In October 2016 the economy was “still weak” and we shouldn’t worry about deficits or debt for a couple of decades. Less than 80 days later the economy magically changed and now deficits matter?
It’s political crap! When the party in power implements their financial agenda, whether it’s more spending or tax cuts, the minority party screams about unsustainable debt. When the process reverses, the charade continues and the new minority party screams about the debt.
The Undeniable Truth
With few exceptions, the political class doesn’t give a damn about the debt. The politicos use the tax system and government spending to buy votes to keep them in power.
They kick the can down the road; secretly hoping any negative consequences happen when they are out of power, enabling them to make political hay and convince the public they should rule forever!
Their behavior won’t change; they will continue to pile up debt until the citizens revolt!
If the politicians don’t care, should we?
Prior to the recent tax cut, The Chicago Tribune reported:
“If the House GOP tax plan becomes law, nearly 81 million Americans – 47.5 percent of all tax filers – would pay nothing in federal income taxes next year.”
Those who pay no taxes (particularly when receiving government handouts) probably don’t care about the deficit.
What about the remaining 52.5% that are working their tails off, seeing their hard-earned tax dollars (and more) being spent by an irresponsible government?
Can something bad really happen?
Common sense economics would indicate, governments creating money out of thin air might temporarily prop up the economy, but eventually, it would create a large debt bubble. When it pops, expect catastrophic consequences.
In 2008, when the government started bailing out the banks, many urged caution, suggesting high inflation and our unsustainable debts would finally come home to roost. It hasn’t happened – yet.
Pundit Bill Bonner looked at the stock market and took a critical view of “Trump’s Quack Economists”:
“Markets don’t like uncertainty. …. Presidential advisors Peter Navarro and Larry Kudlow – wrong about just about everything for just about forever – could be right this time.
Maybe the economy really is as strong as an ox. And maybe stocks will go up from here to eternity. But it’s not what we see….
Not that we are always right. ….
Yes…our error was that we misjudged the power of wrongheaded claptrap. Fake money talks louder…and BS walks further than we thought!(Emphasis mine)
We thought the fake money-pumping scheme had reached its end back in 2009.
We were wrong.”
|When economists criticize and advise the government; it makes little difference; elected lawmakers show zero fiscal responsibility. The train continues down the track, full speed ahead….|
Yes, we should care, and yes bad things can happen. Count on the predictability of the political class. Anyone with wealth or income becomes a target to finance their political spending. We need to protect ourselves.