Spending Ourselves to Death
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“We just can’t afford it!”
Not long ago, every America child heard that, at one time or another, in the home in which he or she was raised.
“We just can’t afford it!” It may have been a new car, or two weeks at the beach, or the new flat-panel TV screen.
Every family knew there were times you had to do without. Every father and mother has had to disappoint their kids with those words. Why is it that what parents do many times a year politicians seem incapable of doing: saying no.
How many times in the last decade have the political leaders of either party stood up and declared, “No, we cannot afford this.”
Consider. Friday, the White House conceded that the deficits over the next 10 years will total $2 trillion more than they had reported just months ago. Instead of $7.1 trillion, we will run $9 trillion in deficits.
Meanwhile, the White House demands a new entitlement — health care coverage for 47 million uninsured who can’t afford it or refuse to buy it — that will cost at least $1 trillion over 10 years. Can we afford this — now?
“We can’t afford not to,” comes the retort. This is “a core ethical and moral obligation,” says Barack Obama.
But is it not a core ethical and moral obligation not to debauch the currency in which most of the hard-earned wealth of the American people is invested? Yet, as Warren Buffett writes in The New York Times, collapse of the dollar and the end of its days as the world’s reserve currency is what we are risking.
Government expenditures are running at 185 percent of revenue, which is like the lone family breadwinner earning $50,000 a year, while the family spends $92,500 a year. With families that do that, it is not too long before the credit cards are cut off, the mortgage is called in and the family Chevy is repossessed.
According to those same White House figures, this year’s deficit will be closer to $1.6 trillion than the $1.8 trillion previously projected. Now, there are only three basic ways to finance that deficit.
The first is by borrowing the savings of one’s own citizens, thus consuming the seed corn of the private economy. The second is by borrowing from abroad. The third is by having the Fed, “through a roundabout process,” writes Buffett, “printing money.”
Assume the Treasury borrows most of the savings of the American people this year, say, $500 billion. Then Uncle Sam is able to persuade Beijing to buy another $500 billion in Treasury bonds. The Fed must still run the printing presses to create another $600 billion.
How long before our Chinese, Japanese and OPEC creditors conclude that the Americans are depreciating their currency, and dump their U.S. Treasury bonds, or demand a higher rate of interest to cover the risks of their dollar-denominated assets sinking in value?
Can anyone believe the dollar can even retain its present diminished purchasing power if we run $9 trillion in deficits over 10 years? How long before producers conclude the same and start to demand more dollars for their goods — and inflation takes off?
As Buffett argues, even when the U.S. economy returns to full employment, the new tax revenue it would throw off cannot close a deficit of that size. One must either slash spending or raise taxes to balance a budget where the feds are spending a fourth of gross domestic product.
But how do we cut spending when the five largest items in the budget — Social Security, Medicare, Medicaid, interest on the debt and national defense — are untouchables and growing faster then the 3 percent to 4 percent a year a full-employment economy can manage?
Are we going to cut veterans benefits, spending on our crumbling infrastructure or education, when Obama is promising every kid a college degree? Are we going to cut funds for Afghanistan and Iraq, and risk losing both wars? Are we going to cut foreign aid after Hillary Clinton has been touring Africa telling one and all America is here to stay?
How about cutting funds for food stamps and the Earned Income Tax Credit? Good luck. How about PBS and the National Endowment for the Arts? Just try it.
Does either party have any plan to cut federal spending from today’s near 28 percent of GDP to the more traditional 21 percent?
George W. Bush didn’t even try, and Obama is making that Great Society Republican president look like Ron Paul.
When a democracy reaches a point where the politicians cannot say no to the people, and both parties are competing for votes by promising even more spending or even lower taxes, or both, the experiment is about over.
“Remember,” said John Adams, “democracy never lasts long. It soon wastes, exhausts and murders itself. There never was a democracy yet that did not commit suicide.”
Patrick Buchanan is the author of the new book Churchill, Hitler, and ‘The Unnecessary War,’ now available in paperback.
COPYRIGHT 2009 CREATORS.COM
Filed under: Politics
The problem with your thesis is that you are ascribing good intentions and transparency to the current administration.
Should we remind folks that those who started Obama’s training had a different view? Will they bother to look up, and understand, Cloward-Piven or Saul Alinsky?
The folks who started ACORN and SEIU, and trained Obama in his formative years, laid out a blueprint for destroying a capitalist system. Have they faded into his PAST? Or are they STILL AROUND? What role do they play?
Let’s release terrorists, and investigate their interrogators. Some think this is “smokescreen” for the healthcare debacle. What if this is smokescreen for Obama’s new “High Value Target Interrogation Center”?
Why does the ENERGY DEPARTMENT need a new “PSCHOLOGY RESEARCH CENTER” to “help pursuade those who don’t believe in global warming”?
Why does the HEALTHCARE bill set up a department for “Counseling Seniors for end-of-life decisions”?
What, exactly, is the Federal Government getting ready to do? Pat Buchanan, I think you are looking in the wrong direction, and the situation is more critical than the subject you are processing.
You know, bankers and insurers may not set out to destroy capitalism, but that’s what they tend to do.
See: Great Depression, Great Recession, etc. It’s not The People who get caught with their hands in the cookie jar and bring down the whole kitchen; it’s the business elite. Roosevelt, like his work or not, was trying to save capitalism rather than let it destroy itself (as it is wont to do); Obama (and, to a lesser extent, Bush) has/have tried to do the same thing.
You can always count on a liberal to try and salvage capitalism, while his conservative colleagues will try and push its limits that much further, towards the brink.
Being a socialist, I don’t consider saving capitalism to be well-intentioned whatsoever, so I agree that the Obama administration is neither well-intentioned nor transparent.
One last thought, and this is for Mr. Buchanan:
Sir, your examples of lavish government spending are, more than not, programs that help the poor against the worst excesses of capitalism. War is federal assistance for the wealthy, I’ll grant, so that example is acceptable, but where is your outrage at massive agricultural subsidy, or corporate tax havens and loopholes, or rampant (continuing) cronyism in the executive branch?
Slave labor in the third world provides cheap goods for Wal-Mart to sell to Americans; in turn, Wal-Mart workers earn so little that they qualify for government aid. Thus, Wal-Mart is abetting slavery abroad, and government dependency at home. This is somehow less wasteful than food stamps? For shame, sir!
I must take the seemingly strange position of agreeing with not only the article in question, but also the seeming dichotomy of the first two commenters, Barney Rebble, and Zac in California. Mr. Patrick Buchanan is right as far as he goes, which is not far enough. Barney Rebble is frighteningly accurate as to the highly suspect agenda of the current administration. And while I consider socialism as only slightly less deadly than communism, I do agree with Zac in California that capitalism as currently practiced in this country is only slightly less deadly than fascism – since it is obvious that the real powers that be in America today are big business – who can afford to influence government on any subject dear to their hearts, mainly obscene profits at the expense of the real engine of the economy – the American working man or woman.
Any thinking person today can see that government in general, this administration in particular, and the fat cat capitalists who really call the shots (despite Obama’s obfuscatory show of batting down General Motors and policing the banking and finance bogeymen) are the only real enemies of these United States. We no longer need fear foreign powers (if only we stay out of other countries’ affairs), but only those domestic enemies who seek our downfall.
This nation began with the best of all possible blueprints – The Declaration of Independence and the Constitution of the United States. Bolstered by the other writings of our Founding Fathers, we had – and have – a foundation unequalled in human history. We have chosen to abandon that foundation and instead have built our hopes and fortunes on very shaky ground indeed. We now find our house crumbling beneath us. Rats, termites, and other vermin have taken such a toll on our beloved home that if it were indeed a physical “house”, it would now be sporting a “Condemned” sign.
Returning to our original foundation and rebuilding our home upon it is the only way we can salvage what was once the bright hope of humanity, in which we were justly proud. This entails not just the opinions of one of the three afore-mentioned writers, but all three, and more besides.
Drastic reduction of the power and purview of the Federal government, concomitant increases in the power of state and local governments, strict term limits on elected office, much stricter oversight of judges – with retention elections accompanied by a written record of their rulings, and living within our collective means at all levels would be a good beginning. To complete the rebuilding process would also require love of country and serious re-dedication to our founding ideals, rather than to partisan politics and our self-serving what-can-you-do-for-me attitude.
The cure will be painful, but the alternative is death.