Follow Us
Become a Fan
Debt Does Matter
I know from your emails that I have a group of regular readers, and as such I don’t want to reward you with boredom and/or too much repetition.
But I feel duty bound to return to a topic I have addressed many times, the U.S. national debt, if only in an effort to raise your hackles and make you send a demanding “do something” email to your congressman or senators if you are a U.S. citizen.
I was inspired to do so by what seemed to be a relatively conservative opinion piece on the debt in, of all places, the New York Times, by Steven Rattner, who served as the lead auto advisor (the “car czar”) for President Obama’s multibillion dollar bailouts of GM and Chrysler.
Rattner currently heads Willett Advisors LLC, the investment firm that manages New York Mayor Michael Bloomberg’s personal and philanthropic assets. (He also has been in trouble with the SEC and the New York attorney general on several grounds, resulting in settlements with some heavy fines).
With that pedigree I think we can safely assume that Mr. Rattner is a liberal in his politics, and a well connected one at that. In an article entitled “The Dangerous Notion That Debt Doesn’t Matter” Rattner writes: “With little fanfare, a dangerous notion has taken hold in progressive [read leftist] policy circles: that the amount of money borrowed by the federal government from Americans to finance its mammoth deficits doesn’t matter. That’s the most irresponsible fiscal notion since the tax-cutting mania brought on by the advent of supply-side economics.”
Supply Side Economics
I have never been much of a fan of “supply side economics” as promoted by my late good friend, former congressman Jack Kemp of New York. We served together in the House of Representatives and I declined to co-sponsor his tax cutting legislation unless it contained some balance with debt reduction.
I once had the privilege of a lengthy private conversation with the late, Nobel Prize winning economist, Milton Freeman, who advocated cutting taxes in part as a check on the propensity of the U.S. Congress to spend money. A charming gentleman, Freeman’s theory, which did not work, was that Congress could not spend money they did not have. Unfortunately, the politicians went right on spending, thus our current $15 trillion debt.
That problem is greatly compounded by the fact that the $10 trillion of debt that is held by investors represents only a fraction of the federal government’s obligations and ignores an additional $46 trillion of commitments to Social Security and Medicare.
The figures are stark. In 1975, government debt per household was roughly equal to half of a typical household’s annual income. Today, it’s 1.7 times. Add entitlements, and the obligations would take a mind-boggling nine years of your family income to pay off.
Most people, eyes glazed over at these astronomical numbers, may ask: “What has that got to do with me?”
They Have Ways of Making Us Pay
What it has got to do with you, me and with every American, is that everyone of us will be forced to pay this debt, either in higher taxes, reduced government services, and more and terrible inflation that will further destroy the sinking dollar – more likely with all three.
Where Rattner ignores logic and goes off the rails is his solution to all this ocean of debt – massive government “investment” (spending) like Franklin D. Roosevelt’s Works Progress Administration to rebuild U.S. infrastructure. Huh?
Now you understand why Rattner was such a good car czar for the big spending Obama. But what kind of a split personality recognizes the looming debt doom we face, only to advocate more spending and debt as the solution?
Now I know why Rattner’s schizophrenic view qualifies for the leftist opinion pages of the New York Times where logic is never tried and the solution for government is always FDR’s cynical “tax, spend and elect.”
Other Posts from the Author
- Leftist Lies Attacks Your Right to Privacy - February 22nd, 2012
- Don't Leave Your Estate Planning Until It's Too Late - February 22nd, 2012
- Panama: An Offshore Banking Playground Just a Short Flight Away - February 16th, 2012
Interested in More Articles Like This? Sign up for The Sovereign Investor today! (It's FREE!)
