As a music fan and collector, I have subscribed to
Rolling Stone magazine off and on since I was a teen.
But even as a teen, I always wished they’d leave the news
reporting to people who knew what they were doing. While I had not yet learned
how liberal the bias was in the media at large, it was obvious in Rolling
Stone, as well as obvious that the alleged “reporting” was somewhat akin to the newspapers at
supermarket checkout that claim Elvis sightings.
But every so often, an article’s title catches my eye, as
did a recent story, “The Mad Science Of The National Debt” by Matt Taibbi.
Mr. Taibbi begins his article saying that the vote on the
debt ceiling limit is being used by Republicans to manipulate the government
into a state of paralysis, implying that the more noble Democrats are simply
trying to run the government.
Taibbi either did not think to check, or has forgotten,
that when this issue came up under Bush’s presidency, Democrats (including a
certain Senator Obama voted against it, and most Republicans voted for it.
Interesting to note that Ron Paul has voted against
raising the debt ceiling regardless of what party sits in the oval office.
In any event, right off the bat, Taibbi screams
conspiracy for what is simply partisan politics in America.
Taibbi goes on to say that comparing the US federal
budget to a household budget is a fallacy because a household cannot raise
money by fiat.
I do not understand Taibbi’s reasoning here. It is true
that a household budget generates money through two ways (income or debt), and
the federal government can tax, borrow or print money.
How one raises revenue is certainly independent of what
one spends money on, and any entity has to limit its spending to be within its
means.
When the debt
ceiling is raised, the federal government is able to borrow more money, adding
to the record deficits that Obama has mounted up.
The federal government will have to pay interest on the
debt, and eventually pay it back.
How, then, does the government pay the debt back?
Well it cannot borrow to pay the debt back-that is the
logic used on those tee-shirts you used to see in the eighties that read “Can I
Pay My Visa With My Mastercard?”
That leaves it with taxation or printing more money.
I will not try to explain why printing more money is
simply taxation in disguise, but I would encourage you to read a book called How
an Economy Grows and Why it Crashes.
The book uses illustration, humor, and accessible
storytelling to explain complex topics of economic growth and monetary systems
and expose the glaring fallacies that have become so ingrained in our country’s
economic conversation.
And while you may not go right out and read that book
before finishing this post, I’ll ask you to accept my word that simply printing
money is not a good thing for the government to do.
Which leaves us with taxation.
Obama is borrowing trillions from China today. Even if
the debt remains outstanding forever, there are semi-annual interest payments
that must be made.
No big deal, right-just collect taxes!
Except what is happing to the population in the United
States?
After World War II, all of the horny GI’s came home and
acted like rabbits with their wives and girlfriends, resulting in what we call
the Baby Boomer generation.
But the Baby Boomers, whether they went to Vietnam or to
college, benefitted from new birth control methods and free love-they did not
need to get married to get laid anymore. Add to this empowered women entering
the work force en masse, and the Boomers failed to outproduce their parents in
the kids department.
And during the remainder of this decade, the Boomers are
retiring.
And according to most studies, they have no retirement
savings.
Why is this important?
Many people think that their Social Security
contributions are sitting in a trust fund somewhere, but that is not the case.
This is a “pay-as-you-go” program, which is why its critics often refer to it
as a Ponzi scheme.
In 1960, the last year for the boomers, there were 5.1
wage earners for every Social Security recipient.
In 2007, that number had declined to 3.3, and after the
boomers retire, it is expected to plummet to 2.1.
That means that every worker will need to contribute in
taxes enough for one-half of an elderly person’s lodging, food, and medical
care.
And now Obama expects them to be able to pay interest on
the increased debt as well. Not to mention all of the other existing government
cash outlays.
So to Mr. Taibbi, and everyone else who wants to
government to continue to hide its head in the sand, I say to you that the
people who a forcing this discussion are, in fact, patriots.
We need to look at WHAT our government is spending money
on and WHY, and not argue about how it should raise the money.
If the federal government limited its excess to things
within its Constitutionally-delegated authorities, we may not be in as big a
mess as we are.
But the excesses of the last few decades on areas like
education, healthcare and saber-rattling around the world have put the countey’s
finances in as bad or worse shape than those of the typical boomer.
Maybe the crunch won’t hit critical mass at the end of
this decade as many predict, but it is only a matter of time, and Mr. Taibbi’s
uninformed rants will not change that fact.
The fact is, every President since Nixon has known that our spending is unsustainable, and every President has ignored that. Only one (Clinton) made any attempt to rein spending in ( look at the relatively stable debt ceiling limit under his reign-he was too busy shtupping interns to spend taxpayer money).
That makes all of them irresponsible at least, if not traitors to the oath they swore.
And they swore that oath to you.
So, America, continue your love affair with Obama while he continues to screw your future behind your back (without the benefit of lubricant).
And keep looking to your atheletes, musicians, and movie stars for guidance. I am sure Matt Taibbi's journalism degree makes him just as much as an economic authority as people like Peter Schiff or Ludwig von Mises. Or even Ron Paul, for that matter.
You keep drinking the Kool Aid.
I'm sure everything will be just fine.
