The Problem with U.S. Fiscal Policy

10 Jan

Recent e-mail message from Star Parker, the black conservative president of CURE – very good quote at the end:

U.S. Fiscal Policy Is Detached from Reality

.  .  .  .

There is an inconvenient truth called reality. There are aspects of reality — things involving behavior and obligations that, unlike a rock falling on your head, can be denied so that, at the moment it’s like it’s not there.

Our political “friends” in Washington welcomed in 2013 for us by turning off the TV, by throwing the unopened bills into the drawer, allowing Americans to enter the New Year under the illusion that something fiscally meaningful has been solved or accomplished.

No one can claim that the problem is lack of information.

Open any newspaper or magazine and there is sure to be at least one report about the spending of our federal government, which now takes almost $1 of every $4 produced by the American economy, or about our trillion dollar budget deficits, to which no end appears in sight, or about our national debt which soon will exceed the value of all the goods and services our whole economy produces in a year, or about the shortfalls of Social Security and Medicare, which together is about five times that.

Doesn’t seem to matter.  .  .  .  Everything will work out. Always does.

Supposedly what we want is a growing, prosperous nation.

But symptomatic of being detached from reality is behaving in ways inconsistent with what you think you are trying to do.

Economic growth happens when success and risk taking is rewarded and sloth and failure is not.

But part of the spending spree that has been going on over recent years has involved bailing out and subsidizing failure — auto companies, banks, green energy.  [I might add “irresponsible individuals” to the list.]

Yet successful small businesses are punished in this fiscal cliff bill. According to the Wall Street Journal, a 2011 Treasury Department study indicated raising taxes on incomes over $500,000 would affect about 750,000 small business and that according to one survey during the fiscal cliff talks, 29 percent of small business heads indicated the result would be less hiring and 32 percent indicated they would invest less.

Meanwhile, not working is being subsidized by further extending unemployment benefits, already having been extended to a mind-boggling 99 weeks.

Which all goes to explain why I was and am opposed to this agreement, which some are celebrating.

That inconvenient truth called reality is something Americans badly need to connect with. If we want all this spending, pay for it. That means everyone. Let’s get the real numbers on the table and lets get out our checkbooks.

If you don’t want to pay, cut the spending.

In the words of the great 19th century French political economist Frederic Bastiat, “When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe.”

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2 Responses to “The Problem with U.S. Fiscal Policy”

  1. Joseph Edward Wages January 11, 2013 at 11:55 am #

    It is difficult to think of a single denizen of the DC cesspool who is blameless. And, they were all elected by, you guessed it, us. I was amazed by the fact the 90+% of congress and the president were reelected; most with impressive margins.

    The next upcoming confrontation will be the debt ceiling. After much haggling and posturing it will be raised. Predictably there will be spending cuts promised. Most involved, unless they are blithering idiots, will know that no real spending will be decreased.

    The ready, and only sure, way to cut spending is to hold to the debt limit as it stands with the view to the future of actually reducing it. If you reach the limit of your credit, what do you do? You cut spending. That will not happen in DC.

    Would you try to borrow more to pay the interest? That is exactly what the rulers in DC will do. The only post that any party will be able to make is “we had more dissenters than they did”. But it will garner the majority of both major parties.

    In the next congressional election cycle, most of the sitting reps and senators will be reelected. Voter allegiance will be to the same political parties that brought us to this point. They will perform as before until the country is in collapsed in shambles around their feet.

    So who is to blame I ask? Not the Democrats, not the Republicans, not the Libertarians, or even the Independents. “We have met the enemy and he is us.”

    • illero January 11, 2013 at 2:34 pm #

      The generation that benefited from the philosophy of Pogo is aging, I think. Thanks for commenting. “Hold to the debt limit” sounds simple and viable — as does my personal favorite, freezing of spending at 2012 levels for a couple of years until we get the reforms done that need to be addressed.

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