Debt Reduction Delusions and the Menace of Big Government
In spite of the rhetoric in the media about a national debt crisis having been averted through a rise in the government's debt limit on Tuesday, August 2nd, the fact is the United States remains very much in the midst of a fiscal disaster.
The Congress has approved and the president has signed a bill raising the debt limit by an additional $2.4 trillion over the next year and a half. In other words, at the end of 2012, the government's debt will have reached a total of over $ 16.5 trillion from its current $14.3 trillion.
When a Spending Reduction Still Equals More Government Debt
The debt ceiling deal requires a matching $2.4 trillion to be cut from projected government spending over the next ten years. In other words, this is not an absolute cut in government spending, as if government would be spending less in the next year compared to the current year. Instead, the deficit reductions represent a decrease from the amount of increasing government spending that would have occurred if no reduction had been agreed to.
So instead of the government's projected total debt over the next decade increasing by around $10 trillion, it will only go up by about $7 trillion. Ten years from now the U.S. government's debt will reach a level, therefore, of nearly $22 trillion dollars, or almost 55 percent higher than it is today.
Understanding this more clearly has been confused by the emphasis given to the fact that the $2.4 trillion debt ceiling increase has been "matched" by that $2.4 trillion decrease in projected government spending. The impression has been easily created in people's minds that these two amounts are in some way cancelling each other out.
The U.S. Treasury is being given the authority to borrow and spend an additional $2.4 trillion dollars over the next 18 months. But the $2.4 trillion spending reduction over ten years represents, on average, a "savings" of $240 billion a year. Another way of thinking about this is that the government now has the authority to spend, on average, an additional $133 billion per month of borrowed money over the next year and a half. "Matching" this, the government is supposed to spend $20 billion less every month over the next ten years.
So, assuming what has been agreed to by the Congress and the president is actually adhered to, it will take ten years of that mere decrease in the rate of increase in government spending to just equal the increase in the government's debt between now and the end of 2012.
Clearly this entire process has been one of smoke and mirrors by both political parties. New Congressional fiscal committees to deal with the government's debt; supposed "trigger mechanisms" to impose "automatic" across-the-board cuts in government spending if deficit reduction goals are not agreed to; and appeals for Washington's swarm of spending frenzied politicians to act like responsible adults instead of immature children do not grapple with the fundamental problem facing America.
Taming the Fiscal Leviathan to Save America
The United States government is a fiscal leviathan with an insatiable appetite for the wealth and income of those working in the productive private sector. But the government is not a disembodied monster with a will of its own.
Government is made up of individual politicians desiring election and reelection to political office; the bureaucrats manning the departments, bureaus and agencies wanting larger budgets to justify more promotions, higher salaries, and greater authority over other people's lives; and special interest groups wanting to use the taxing, spending, and regulating powers of government to redistribute wealth in their direction, acquire more revenues and higher profits on the basis of political connections than they could earn in the competitive marketplace, and impose their ideological desires and dreams on others who would prefer to live their own lives.
It is this "iron triangle" of politicians, bureaucrats, and special interest groups, as free market economist, Milton Friedman, call them, that make up what government does and for whose benefit, and at a cost to those remaining in society who make up the net taxpayers and burden-bearers of the modern interventionist-welfare state.
The problem we face is that those who benefit from some form of government largess make up a slight majority of the citizenry, according to the latest estimates. It now seems to be the case that the costs of government are born by a minority of the taxpayers of the country. A minority of the working population labors to support and pay for government-supplied incomes, transfers or related benefits enjoyed by a privileged majority.
And what Washington's "iron triangle" wants to spend that it cannot collect in taxes it has been paying for with borrowed dollars that will push the government's debt to $16.5 trillion by the end of next year – thanks to the Congressional and presidential "solution" to the debt ceiling crisis of August 2011.
The only real solution to our government's debt dilemma is to challenge the rationales and justifications for the size and scope of Washington's reach over the lives and the peaceful and productive market activities of the American people. We must work to persuade our fellow Americans not only that we can no longer afford the taxing, spending, and regulatory burdens of government without threatening the society's productive capabilities, but also that it is inconsistent and opposite to the principles of liberty upon which the country was founded.
If we don't succeed in this endeavor we run the risk of destroying the very political and economic foundations upon which America's freedom and prosperity have been based.
Posted by injun1 on 08/03/11 09:34 PM
jkluttz, it's a spooky thought isn't it?
Posted by jkluttz on 08/03/11 09:19 PM
JFK wanted to use the Post Office for a jobs program. I don't think he actually did it, but this time a desperate government could do exactly as you suggest.
Posted by injun1 on 08/03/11 07:40 PM
The bureaucratic nightmare that I submitted earlier in this forum is the leech that is eating us from the inside. We must stop this destructive animal that is sucking the very life from us. They are ENTRENCHED and don't give a damn, while dressed in their tidy little civil service uniforms. If we don't fire these people and get control of them they are simply going to eat us alive! They are the entitlement we have to get control of.
The President doesn't have any more money to hush the masses. He doesn't have any job prospects for the unemployed. The only way he can control a future outburst is to create more government jobs to sooth the restless beast. Mark my words, federal government jobs are getting ready to be used as hush money and we better stop it at the gate!
Posted by injun1 on 08/03/11 07:08 PM
Jeanna, I felt no need to move to Hong Kong, but I made sure I moved my banking there a long time ago!
Posted by Jeanna on 08/03/11 05:58 PM
A democracy is mob rule. And, we have nothing now but mob rule. An elected representative stands no chance for outing an un-elected bureaucracy. And, the un-elected bureaucracies have mandates and charters to fulfill. The game each budget cycle is to spend what they were given in the last budget cycle, so they can claim more in the next budget cycle. If they leave any money on the table, their future budget will be held the same, or even reduced. And, that is just not acceptable, because they really need more people. They have to hire one more person to sit by the window, and another person to warm a chair, and one more to twist paper clips.
You and I could cut this budget in an hour. OK, maybe two. No tears are necessary for the federal or state workers who lose a job. Each one represents a savings of true productive investment potential, because the transfer payment that would have gone from our pockets to theirs can now be used productively to grow our economy. Even more so, as they must determine how to become a productive member of society again. More productive people, more growth. They will figure it out very quickly.
Gov't only transfers money around. They do not add money to the system by taking ours and hiring someone at the CIA, or the FBI, or the DOD, or the staffers in Congress. It is the same money. The only ones that can grow an economy are the producers. And, as long as we are held back and tied down, this country is going no where. Fast.
It may be time to move to Hong Kong.
Posted by frick on 08/03/11 05:27 PM
There are a thousand hacking at the branches of evil
to one who is striking at the root.
---Henry David Thoreau---
"Reclaim the Republic, Restore the Constitution."
Sounds good doesn't it?
For it to be anything but political rhetoric, what does it mean?
Reclaim the Republic?
The republic was abandoned when all Americans became "citizens of the United States" federal government.
If you recall, prior to the so-called "Civil War", (an international war in reality) we were not "one nation"..."indivisible". We were a confederation, a voluntary Union, of separate and independent nation States. Francis Bellamy, a socialist, wrote those words of the Pledge of Allegiance.
"All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and the State wherein they reside."---Amendment XIV, Section 1.
Were the people of the original republic citizens of the federal government? The answer is no. They were not. The federal government had no jurisdiction over the people of the original republic.
The federal government can only have jurisdiction over federal citizens of the United States federal government.
'Constitutional' and 'federal citizen'; oxymoronic. Federal citizenship is anti-constitution, anti-(original)republic.
If not the republic and republican form of government, what form of government then do citizens of the federal government United States consent to?
As federal citizens, they, we are consenting to a "national" socialist democracy.
Democracy being the antithesis of constitutional republic. An anti-republic democracy. Democracy and republic being mutually exclusive, one necessarily destroying the other.
Republic - Rule of Law - the Constitution.
Democracy - Rule of Men - the Vote.
Elected officials in a representative republic are bound by the Constitution, the Supreme Law of the Land.
Not so in a democracy where elected officials make law through their vote, "living breathing law". Who can say they have not seen this to be true?
John Adams said, "Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There was never a democracy yet that did not commit suicide."
Suicide meaning ultimate communistic totalitarianism demise.
"Democracy is indispensable to Socialism." - V. I. Lenin
"Socialism leads to Communism." - Karl Marx
Perhaps it's time we question our indoctrinated paradigms about the form of government we are participating in?
Click to view link
Posted by jkluttz on 08/03/11 05:22 PM
"The problem we face is that those who benefit from some form of government largess make up a slight majority of the citizenry, according to the latest estimates."
All of us (100%) are entitled to social security, medicare, government schools, student loans, flood insurance, etc. For this reason even so called Tea Partiers are conflicted about reducing the size of government. The "iron triangle" now includes everybody in America. Such a system could work as long as a minority was milking the majority. With everybody now openly milking everybody else, the end has to be near.
Oh wait, how about a world central bank to keep the scam going? Who will not support that?
Posted by frick on 08/03/11 05:17 PM
Perhaps we should not be too quick to look outside ouselves.
"All men are created equal."
Americans were free men. And free men are free to place themselves into 'voluntary servitude'. "Involuntary servitude" is unlawful in America.
"Neither slavery nor involuntary servitude, ... shall exist within the United States."
Can any man subject to compelled and coerced taxation honestly be considered free?
Of course not. The question then is, is that servitude voluntary, or involuntary?
This is the nature of federal citizenship under the Fourteenth Amendment as stated by the Supreme Court of the United States: 'It is the natural consequence of a citizenship [92 U.S. 542, 551] which owes allegiance to two sovereignties, and claims protection from both. The citizen cannot complain, because he has voluntarily submitted himself to such a form of government. He owes allegiance to the two departments, so to speak, and within their respective spheres must pay the penalties which each exacts for disobedience to its laws.' U.S. v. Cruikshank, 92 U.S. 542 (1875)
Obviously it is presumed to be voluntary servitude.
Did you not sign a SS-5 form, placing yourself into the federal Social Security system?
Did you sign your child's Birth Certificate?
Did you claim under penalty of perjury to be a "citizen of the US" (federal government)? Check your voter registration, or your bank account agreements.
There are many other voluntary agreements as well.
One can claim constitutional protected unalienable Rights till the cows come home.
But voluntary contracts supersede the Constitution.
This is the unseen cage in which Americans find themselves.
The solution then is elementary. However, actually releasing oneself from his self inflicted obligations is quite another matter entirely.
'None are more hopelessly enslaved than those who falsely believe they are free.'
~ Johann Wolfgang von Goethe
Posted by rossbcan on 08/03/11 05:06 PM
"Once you give someone the power..."
they took it and said (lied) that our ancestors voted our servitude and enshrined it into law, beyond "debate". So, does ANYONE, living or dead have the right to place another into servitude?
this is a personal question, for each individual. Are you a slave? Are you going to tolerate and not defend yourself from those who lay a claim to your life?
It is the statistics of how these questions are answered within society (not democratic vote) that determines "consent of the governed" and, more importantly, the fate of dissenters, at the hands of tyrants wielding your "consent", moral "authority", wallet and virtually everything else.
Posted by frick on 08/03/11 05:06 PM
Since one does have the power to use force if necessary to take, what should one expect as a limit on what will be taken.
Under such circumstances, is there any doubt, what there is will be taken until there is nothing left to take?
Click to view link
Posted by frick on 08/03/11 04:13 PM
Once you give someone the power to take "taxes" against your will, with the use of force if necessary, what do you think your vote is worth?
Rhetorical questio. We've all seen what it's worth.
Posted by frick on 08/03/11 04:01 PM
They've already got it all.
Senate Document # 43; SENATE RESOLUTION NO. 62 (Page 9, Paragraph 2) April 17, 1933: 'The ultimate ownership of all property is in the State; individual so-called 'ownership' is only by virtue of government, i.e. law, amounting to mere user; and use must be in accordance with law and subordinate to the necessities of the State.'
Our children ARE waking up homeless.
"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -- Thomas Jefferson -- The Debate Over The Recharter Of The Bank Bill, (1809)
Click to view link
Posted by oldman67 on 08/03/11 02:32 PM
Everyone in America realizes or government is out of control with spending much more than they take in. federal spending is up 46% in the past decade while the economy has grown by 14%(adjusted for inflation) government is growing over 3.5 times faster than our ability to sustain it. The national debt is rising by well over 4 billion per day.This is frightning! Fifty nine percent of citizens are on some type of government assist program. Since only fifty percent pay taxes this can't be sustained. All this debt deal did was give Obama an extra 2.4 trillion and congress to spend until this happens again. Kicking the can down the road is exactally what happened. The Cato Institute said when everything is included the actual total debt is 60 trillion dollars.
Posted by injun1 on 08/03/11 02:28 PM
Oh, I don't disagree! They want it all.
Posted by rossbcan on 08/03/11 02:15 PM
"Are you not trying to starve me to death?"
Yes (I AM), if you choose not to avert your fate by engaging in peaceful, voluntary "quid quo pro" trade or, if you forcefully attempt to assert your entitlement "opinion", well, death will be quicker, but, no less pleasant, by your own choice.
These are "life and death" issues, no longer abstract "philosophy" (Civilization's seed corn gone, far closer to subsiatance survival). "They" set up the "us or them" Hegellian dialectric. I CHOOSE 'them". They should have been "careful what they wished for". Success EQUALS fatal.
Posted by injun1 on 08/03/11 01:53 PM
I say unto thee, give me your gold and I shall break bread with you. As soon as you bake it. What you need flour? I say unto thee, give me your gold and I shall provide you with flour. What you are out of gold? My brethren, if you have no gold, thus I can not provide you with flour to bake bread. So how are we to eat, my brethren? Are you not trying to starve me to death?
Posted by rossbcan on 08/03/11 01:20 PM
Just to point out the obvious, I have "been there, done that" with my totally irresponsible ex-wife and her addictions, including "credit abuse". Banks lent to her, against my expressly stated will, based on "full faith and trust" in me, as a responsible person, "on the hook" for the consequences of actions, by another, over which I had no control, had not consented to and refused to sanction. The courts, contrary to law, persisted in attempting to hold me "to account" for the actions of another.
This is not about dissing my poor ex, who has suffered far more, by her own actions than anything I would have wished on her.
No, this "situation" is EXACTLY similar. There are three parties, of similar mindset:
The state (indebted): irresponsible deadbeat, consuming other people's resources, providing no value (quid quo pro), expecting not to face the consequences of their own actions. And, like my ex, able to command guns (on her behalf) should the "decreed responsible" dispute. Which I did, successfully (against THEIR decrees), at great cost.
Financial Elites: Lent and still lending to deadbeat states, fully certain that they will get their "pound of flesh" from the pledged collateral (servitude of the people, at point of guns). Their end game is to have title to everything REAL and reacquire their feudalist dream and new dark age, with far less "of us".
The people: On the hook, for so long as "consent, or, at least tolerance of the governed" is forthcoming.
I got divorced, which was not the clean break it should have been, with legal expectations that I, forever, meet my ex's "entitlements". I told THEM (law) up front: aint gonna happen and, it didn't.
In this case, the remedy is the same: divorce from states, totally, including what they falsely believe they are "entitled" to (your servitude).
As to "banks" (THEIR haircut), it is Odious Debt, not consented to nor benefited from by those (the productive) who are "expected" to pay. "Odious Debt":
Click to view link
Of course, the root cause of our woes is lack of "justice" and the wit to recognize the true (non Machiavaillian) survival of civilization neccessity:
Justice Defined: We are all free to profit or suffer and learn (adapt to excellence) by facing the consequences of our OWN choices. Injustice is to be forced to suffer the consequences of choices of unaccountable (irresponsible) others..
"The danger is not that a particular class is unfit to govern. Every class is unfit to govern. The law of liberty tends to abolish the reign of race over race, of faith over faith, of class over class." ~ Lord Acton
Posted by Jackson on 08/03/11 12:30 PM
The unstated problem with this issue of increasing the national debt is that with the current Federal Reserve policies it is merely authorization for the Fed to increase the monetary base with more Obamabucks.
Posted by frick on 08/03/11 12:21 PM
Amendment XIV, Section 4:
"The validity of the public debt of the United States, ... shall not be questioned."
Pertaining to "citizens of the United States" federal government, a national socialist democracy.
"As long as mankind continue to pay 'national debts,' so-called-that is, so long as they are such dupes and cowards as to pay for being cheated, plundered, enslaved, and murdered-so long there will be enough to lend the money for those purposes; and with that money a plenty of tools, called soldiers, can be hired to keep them in subjection. But when they refuse any longer to pay for being thus cheated, plundered, enslaved, and murdered, they will cease to have cheats, and usurpers, and robbers, and murderers and blood-money loan-mongers for masters."
---Lysander Spooner, "No Treason"---
Click to view link
Posted by injun1 on 08/03/11 11:59 AM
"Of course, the U.S.A. is not going to go bankrupt. The point of this piece is to make the inevitable alternative obvious. The U.S. will repay its debts, backed with the full credit of the government. Debts will be paid in full... with itty, bitty little dollars."