federal debt | Rockin' On The Right Side

A conservative friend posted a clever and shrewd tweet today. Democrats (and some Republicans) on the Senate Finance Committee are holding up confirmation of US trade representative Robert Lighthizer, demanding a bailout of union miners’ pension funds in exchange for their votes. What’s new? This kind of arm-twisting politics is standard operating procedure in Congress. But my friend’s exasperated reaction to the benevolent-sounding Miners Protection Act points out a fact that never seems to occur to anybody inside the Beltway: “Taxpayers are not ATMs! It’s not your money to give away!”

I realized a while back that most legislators (and presidents for that matter) don’t worry about taxpayer disapproval when they pass a spending bill. Here’s why:

Most voters don’t pay federal income tax, or pay very little. They don’t feel personally impacted by government spending, because they think the money is extracted from somebody else – the “rich guys”. Members of Congress (especially Democrats who rely on low-income or no-income voters to keep them in office) are heroes to their constituents when they spend more money. In fact, incumbent legislators are almost always re-elected because they can brag about “bringing home the bacon” to their home districts.
Americans don’t worry about spending more money because there doesn’t seem to be any down-side. Unlike families or businesses, the government never runs out of money, regardless of tax revenue or spending levels. Our leaders have learned that they can print and/or borrow money without limit, because nobody has the courage to shut down the government and send employees home. Yes, we have a $20 trillion debt. Yes, interest on savings has been non-existent for many years. Yes, wages have been stagnant for decades as the government crowds out private enterprise, gobbling an ever-growing bite of the GDP pie. Yes, if continued it will all come crumbling down on the heads of our children and grandchildren. But the average Joe still doesn’t relate government spending to his own financial well-being. In fact, most people think more government spending helps them.
And when you get right down to it, our congressmen are only doing what they were born to do. The job description of a legislator can be boiled down to four words. What do you do for a living? Spend other people’s money. The rain falls. The wind blows. Congressmen spend. It is existential. In the eyes of a government official, the solution to every problem is to spend more money. If he isn’t spending money, he is a “do nothing” congressman.

Fortunately, the election showed that there are still (barely) enough Americans with a grasp on reality to step on the brakes before our nation careens off the financial cliff, taking the civilized world along for the plunge. Our voices were finally heard. But the narrow victory last November was just the beginning. Too many of our leaders either still don’t get it, or will soon forget that they got it. We may have stopped at the edge of the cliff. But the cliff is still there.

We can’t eliminate all government spending, and in some strategic areas we will have to invest more than we have in recent years. But it’s childish and dangerous to think that all of our current expenditures are still necessary and untouchable, and our only option is to spend more.

Tom Balek – Rockin’ On the Right Side

Some men climb a mountain,
Some men swim the sea,
Some men fly above the sky:
They are what they must be.
But, baby the rain must fall,
Baby, the wind must blow,
Wherever my heart leads me
Baby, I must go. Baby I must go.

Glenn Yarbrough – Baby The Rain Must Fall

The music scene in the early 60s went through a sometimes awkward transition from “folk” music to “rock”. The Band was Bob Dylan’s backup group when he first put down his acoustic guitar and went electric. After getting booed off the stage every night for weeks, Robbie Robertson, Levi Helm and the rest of The Band quit and went their own way, but Dylan soldiered on, clearly ahead of his time. Here’s another example of the folk/rock insurgency: check out the blonde dancer bravely bouncing through folkster Glenn Yarbrough’s smoothie!

hot fudge sundae In 1966 I was a junior high kid in small-town Montana when I got my first – and maybe most important – lesson in economics and personal finance.

That year was a whirlwind of change for me. I had just left city life in the projects with my welfare mom to live with my dad, a hard-working small-business owner. Everything was new – the small-town culture where people are accepting but demand responsibility; the freedom and fresh air walking through the woods and fishing in the beautiful mountain streams; the first exposure to the working world where one gets only what he earns; the little family luxuries like having clean clothes to wear and breakfast on the table every day.

But back to my economics lesson.

I didn’t know it at the time, but the crabby old guy who owned the local drug store was actually on a one-man mission to teach economic responsibility to the local youth. Allen’s Drug Store featured an old-fashioned soda fountain, and old-man Allen served up a world-class hot fudge sundae: whipped cream, nuts, and a cherry on top. For a quarter!

Like most small-town kids at the time, I was doing odd jobs and making a buck here and there. I also got an allowance of fifty cents per week, which seemed like a fortune to me. A quarter for a hot fudge sundae at the drug store was well spent, and I had bought a few for cash before I learned from my older sister that Mr. Allen would actually let you “charge” the cost of a sundae, and you could pay him later.

I ran right down to Allen’s and ordered up my hot fudge sundae. “Can I charge it?” I asked. “Sure,” Mr. Allen said. I felt like a big shot.

The next day I was back at the drug store, charging another sundae. It just doesn’t get better than this! And within another day or so I was back again. And again.

One day Mr. Allen went to his little box of index cards, picked out mine, and saw that I owed him for a half-dozen sundaes. “I’m afraid this is the last one, until you pay your bill,” he said. I was a little bit ticked off, because I had already spent all my money on Mad magazines, baseball cards, and other important stuff. But then I started thinking about the whole “charge account” thing, and it started to make sense. Mr. Allen couldn’t just give me free sundaes forever. And I couldn’t eat sundaes every day when I was only bringing in fifty cents a week.

So I went without sundaes for a while and saved enough money to pay my bill. My sundae consumption went way down. I found that they actually tasted a lot better on the rare occasion when I decided to buy one – for cash.

Thanks for the lesson, Mr. Allen.

Today the nation of Greece defaulted on its IMF loans. Banks put limits on withdrawals. Stock markets tumbled worldwide. It’s not that Greece’s economic collapse is, on its own, that big a deal – their GDP is only about equal to that of Louisiana. What really scares thoughtful people is that other European nations – and the United States, the world’s largest economy – are following the same path as the Greeks.

Even junior high kids can understand that spending more than one earns is a recipe for disaster. Our Federal Reserve, and the European central banks, held interest rates to zero for many years so that our governments could borrow and spend (pandering for votes) to the point that repayment of the debt is metaphysically impossible. In addition to the federal insolvency, local and state governments have promised pensions and benefits to their employees (again, pandering for votes and union support) that citizens will never be able to afford.

It is embarrassingly simple. If we don’t elect conservative officials with at least junior-high level economic skills, and if we don’t allow them to restrict government growth and spending, there will be no more hot fudge sundaes. Try telling that to your grandkids.

Boehner and McConnell have to go. So do the many representatives whose sole interest is holding on to their positions and power. Our only hope is to support and grow the Freedom Caucus, Congress’ conservative wing and the only antidote to the liberal Republican leadership. And we must elect a president who understands economic reality. At least at the junior-high level.

Tom Balek – Rockin’ On the Right Side

Got to pay your dues
If you wanna sing the blues,
And you know it don’t come easy!

It Don’t Come Easy – Ringo Starr

A fun little romp with George and Ringo!