The federal debt
Working as an intern at the American Conservative Union, federal spending has been a HUGE issue for us. For instance, in the Bush administration, we're going to have to raise the debt ceiling (the maximum amount of money that Congress can borrow) for the fourth time. Congress has raised the debt ceiling five times in history. Three of the five times the debt limit has been raised has been under Bush. For fiscal conservatives, this is unconscionable. It's part of the reason why conservatives are still pretty sore with Bush.
Currently, the federal debt ceiling is roughly $8.2 TRILLION. The current federal debt is around $8 trillion and rising. In case you haven't noticed, Congress can blast through $200 billion in a heartbeat. For the next three fiscal years alone, the projected budget deficits are roughly $333 billion...a THIRD of a trillion dollars for each of the next three fiscal years. In otherwords, we're planning on racking up another TRILLION in debt in 3 more years. UN-BELIEVABLE!!
If I were America's libertarian emperor, I'd not only slash spending to meet the most conservative of budget receipts estimates, but I'd ensure that AT LEAST $100 billion per year was spent on debt retirement. Even under my plan, it would take about EIGHTY TWO YEARS to retire all of the federal debt.
Now, some may say, "Who cares about the debt?" In fact, I very clearly remember my corporations professor at the Cardozo School of Law of Yeshiva University say that no corporation bothered to pay off debt, they just kept paying the interest. I believe their ilk is the problem. Why? Simple economics will show the problems they create.
When there's a high demand for money (the desire to borrow and spend), the cost of money goes up (the amount of interest lenders charge for their money). So tons of borrowing drives up interest rates. What's so bad about high interest rates? A TON of things, like high mortgage rates. High mortgage rates prevent people from buying houses, which depresses the construction market and makes construction workers unemployed. High rates also discourage consumers from taking out loans and using collateral to buy things like boats, cars, washers & dryers, etc. If there's less demand for consumer goods, then those markets are depressed and workers are without jobs. Also, if businesses are paying more in interest costs for the loans they take out...where does that money come from? Consumers end up paying more for goods and services to cover businesses increased costs. The high cost of money may discourage a corporation from expanding, or prevent the entry of new competitors to the market. So, high interest rates hurt the common man in the form of unemployment, fewer newly created jobs, and less wealth in general.
There's also only so much money in the economy, even in the world economy. Each lender only has so much to lend, and lenders have little desire to make loans to those who will not repay them. Eash lender also wants to maximize their profit on each loan. So, the federal government is directly competing with businesses and the common man when they borrow. When the money supply is exhaused, or when lenders no longer believe the US is a safe investment, what next? Print more money? Devalue the dollar so much that as in post-World War I Germany we have to carry wheelbarrows full of cash to the store to buy groceries?
Last night, I attended the first of three evenings in a Leadership Institute Capitol Hill Staff Training class. During the class, one student interjected that as long as other countries are willing to buy federal bonds to finance our debt and spending, who cares? Well, I for one have no desire to continue to make China, the next big communist threat, richer by sending them interest payments on top of the principle we owe them. GRANTED, if China lends to us, China has a VESTED interest to ensure our economy does well so we can pay them off...unless they're willing to take the hit and write off the debt we owe them. Don't we make China rich enough already? Just about everything we buy is made in China. We send them our money for their goods, then China sells us our money back so we can go deeper in debt to bludgeon our taxpayers and consumers more. Something is just wrong about this. I'm a free-marketeer, but I can't see the silver lining in this. I believe just about any rational economist should argue that we need strict fiscal discipline in Congress.
But the presenter at the time in the LI class stated that Congress expects to offer about $50 Billion in spending cuts and about $70 Billion in tax cuts. Theoretically, this does not result in another $20 Billion in debt because the tax cuts will result in economic benefit that should raise tax receipts coming into federal coffers. But this is what Congress expects? This cut in spending is PATHETIC!! I've already said that in future years we're going to be running $333 Billion deficits, and Congress plans on, in essence, only spending $283 billion more than they've raped from us in taxes?!! UN-BELIEVABLE! While this should NEVER be done, and it's entirely counter to the First Amendment, we'd be justified if we were to dismiss just about every member of the Senate from office, take the 100 member Republican Study Committee and promote them to Senators, then hold House elections to replace the RSC members. Why?
There's a Republican adage in the House that, "Democrats are your opposition, but the Senate is your enemy". The Senate is the body standing in the way of fiscal responsibility. There are just too many moderates in the Senate for the conservatives in the House to pass a balanced budget that includes debt reduction. In fact, there's not even 218 conservatives in the House. If the RSC is any indication, there's only 100 conservatives in the House. That's dismal.
Currently, the federal debt ceiling is roughly $8.2 TRILLION. The current federal debt is around $8 trillion and rising. In case you haven't noticed, Congress can blast through $200 billion in a heartbeat. For the next three fiscal years alone, the projected budget deficits are roughly $333 billion...a THIRD of a trillion dollars for each of the next three fiscal years. In otherwords, we're planning on racking up another TRILLION in debt in 3 more years. UN-BELIEVABLE!!
If I were America's libertarian emperor, I'd not only slash spending to meet the most conservative of budget receipts estimates, but I'd ensure that AT LEAST $100 billion per year was spent on debt retirement. Even under my plan, it would take about EIGHTY TWO YEARS to retire all of the federal debt.
Now, some may say, "Who cares about the debt?" In fact, I very clearly remember my corporations professor at the Cardozo School of Law of Yeshiva University say that no corporation bothered to pay off debt, they just kept paying the interest. I believe their ilk is the problem. Why? Simple economics will show the problems they create.
When there's a high demand for money (the desire to borrow and spend), the cost of money goes up (the amount of interest lenders charge for their money). So tons of borrowing drives up interest rates. What's so bad about high interest rates? A TON of things, like high mortgage rates. High mortgage rates prevent people from buying houses, which depresses the construction market and makes construction workers unemployed. High rates also discourage consumers from taking out loans and using collateral to buy things like boats, cars, washers & dryers, etc. If there's less demand for consumer goods, then those markets are depressed and workers are without jobs. Also, if businesses are paying more in interest costs for the loans they take out...where does that money come from? Consumers end up paying more for goods and services to cover businesses increased costs. The high cost of money may discourage a corporation from expanding, or prevent the entry of new competitors to the market. So, high interest rates hurt the common man in the form of unemployment, fewer newly created jobs, and less wealth in general.
There's also only so much money in the economy, even in the world economy. Each lender only has so much to lend, and lenders have little desire to make loans to those who will not repay them. Eash lender also wants to maximize their profit on each loan. So, the federal government is directly competing with businesses and the common man when they borrow. When the money supply is exhaused, or when lenders no longer believe the US is a safe investment, what next? Print more money? Devalue the dollar so much that as in post-World War I Germany we have to carry wheelbarrows full of cash to the store to buy groceries?
Last night, I attended the first of three evenings in a Leadership Institute Capitol Hill Staff Training class. During the class, one student interjected that as long as other countries are willing to buy federal bonds to finance our debt and spending, who cares? Well, I for one have no desire to continue to make China, the next big communist threat, richer by sending them interest payments on top of the principle we owe them. GRANTED, if China lends to us, China has a VESTED interest to ensure our economy does well so we can pay them off...unless they're willing to take the hit and write off the debt we owe them. Don't we make China rich enough already? Just about everything we buy is made in China. We send them our money for their goods, then China sells us our money back so we can go deeper in debt to bludgeon our taxpayers and consumers more. Something is just wrong about this. I'm a free-marketeer, but I can't see the silver lining in this. I believe just about any rational economist should argue that we need strict fiscal discipline in Congress.
But the presenter at the time in the LI class stated that Congress expects to offer about $50 Billion in spending cuts and about $70 Billion in tax cuts. Theoretically, this does not result in another $20 Billion in debt because the tax cuts will result in economic benefit that should raise tax receipts coming into federal coffers. But this is what Congress expects? This cut in spending is PATHETIC!! I've already said that in future years we're going to be running $333 Billion deficits, and Congress plans on, in essence, only spending $283 billion more than they've raped from us in taxes?!! UN-BELIEVABLE! While this should NEVER be done, and it's entirely counter to the First Amendment, we'd be justified if we were to dismiss just about every member of the Senate from office, take the 100 member Republican Study Committee and promote them to Senators, then hold House elections to replace the RSC members. Why?
There's a Republican adage in the House that, "Democrats are your opposition, but the Senate is your enemy". The Senate is the body standing in the way of fiscal responsibility. There are just too many moderates in the Senate for the conservatives in the House to pass a balanced budget that includes debt reduction. In fact, there's not even 218 conservatives in the House. If the RSC is any indication, there's only 100 conservatives in the House. That's dismal.
The soultion? Despite a 98% re-election rate for incumbents, conservatives need to bite the bullet and run primary campaigns against incumbent moderates in droves. If a primary challenger gets a sizeable percentage of primary votes, the incumbent may start to listen to conservatives and tack to the right.
It was Plato that said, "The price good men pay for indifference to public affairs is to be ruled by evil men." We're paying that price now. Conservatives are pretty active in politics, we vote, we donate, and we volunteer, however, it's clearly not enough anymore. We need to be more choosy about our candidates. We need to research who is running. If no candidate is conservative enough, we need to find a conservative to run in every congressional district, and in every state legislative district, and in every school board district, and in every city ward, and for every county board seat, and in every sheriff's race. We can't just settle for the same old schmoes anymore.
posted by New American Rebel at 1:50 PM
1 Comments:
You're exactly right my friend. We need to raise up true conservatives in every Congressional seat and not settle for anything less. The American people are tired of politicians from both sides just giving rhetoric to stay in office. We need people who are going to put their words into practice and their convictions into action. We just have to keep the faith and get the job done. I am very optimistic about the future of conservatism because we have people like yourself who understand the times and know exactly what needs to be done.
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