Aging, many honest people will tell you, is no fun. Aside from the usual stuff that accompanies physical decline, there is often an element of deja vu. Or something akin to it. You been around long enough, you think you’ve seen or heard pretty much everything. And sometimes, you have.
Now we’re about to be treated to a particularly egregious example of recycling, courtesy of the Party of the Unpalatables. The way it normally works is they screw things up, lose an election, point to the incoming Democrats, and say, “He (soon She) did it. He is the reason why all these bad things are happening.” And, bingo, at least a third of your fellow Americans believe it. They’re clueless, of course, but they vote, so now you have the political equivalent of a Quarterback Controversy. These are no fun. They usually distract from other deeper problems, like a lousy offensive line or dyslexic receivers. But then you’d have to be from Philadelphia to know that. And you probably aren’t. Your loss.
Now that we’re ridin’ with Biden, you’re about to get treated to another edition of a Golden Oldie, which I call “The People’s Money.” Actually, I didn’t make that up. W, or Bush Minor, came up with it in 2001. Since you may not have been paying attention, or not even been born then, I’m gonna remind you what this involves. And why it matters.
A little history. When Hillary Clinton’s husband was elected President in 1992, overnight interest rates were around 3 percent. By the time he was reelected in 1996, they had risen to over 5 percent. At the same time, the federal budget deficit, which hadn’t been in surplus since 1969, came steadily down (a negative negative) and after he was reelected, the budget went into surplus (a negative-negative equals a positive) in 1998. Without making this too complicated, the economy (total demand) was actually growing, so while while supply of federal debt (think credit which is basically borrowing ) was falling, you got rising short term rates This may seem odd, but believe me, we would get back to normal soon. Because the Unpalatables were gonna give the People back their Money.
Some of you may recall Jim (“It’s the Economy, Stupid”) Carville saying he wanted to be reincarnated as the bond market–cause it could intimidate everyone. Political guys don’t like rising interest rates, even if they are consequence of fiscal virtue. Cause they tend to slow commerce down and maybe get the other party elected. Which is almost what happened in the “Selection of 2000.” Maybe Gore really won, but who knows? The Unpalatables were just warming their fraud chops up, so it was messy. Anyhow, W got selected over Gore. And W, being the scion of Read My Lips (“No New Taxes”), Bush Major, promptly started cutting taxes again. Because we had a surplus under Mr. Clinton, and that meant Uncle Sam was taking in more than he was paying out, imagine. Uncle Sam was reducing the national debt by saving! Other catastrophes followed, including 9/11, and an unfinanced war in the Middle East. But no matter. Because with a tax cut (more borrowing) and lots of red ink, the People had their money back again. Confused? You must be a Democrat or something.
Ok. What on Earth does this have to do with Biden, the Unpalatables and other things fiscal? Well, I read the other day that the paragon of rectitude and virtue, Lindsey Graham, thinks we need to have a serious conversation about the national debt. Now according to Investopedia, where I did deep research, the ratio of debt to GDP in the US is over 100 percent. That is held to be a Bad Thing, especially since the ratio had fallen to 30 percent in the 1970s after maxing out over–100 percent–at the end of World War II. Now, you see, 100 percent is some kind of Magic Number (it used to be 70 percent, but magic has to keep up with the times). And the reason it’s back up to levels last seen by FDR is because of THE DEFICIT. See, this year’s deficit becomes next year’s debt–what you borrow now you owe next month. Unless, for example, you run a SURPLUS (you save instead of borrow), but then, but government saving is…stealing the people’s money.. Because a government has to borrow and tax to raise money, having essentially no other means to sustain itself (what you think, it raises corn and tomatoes on national parkland and sells it?) If it’s taxing, it’s stealing. If it’s paying off debt, it’s stealing. So unless you blow up the government, it’s stealing. Ah……Now it’s starting to make sense. This is why the Unpalatables hate government. Because Government, to paraphrase Rousseau, is theft. No, that’s the Trump Administration, but I digress.
The reason why Lindsey thinks it’s time to have a birds ‘n bees talk about the national debt is because he’s afraid that Joe Biden may want to steal from you by rebuilding infrastructure (think municipal water systems like Flint), or even preparing the interstate network for the inevitable future of electric vehicles, or funding health care so that parts of the South don’t look like the Third World (no, this is not socialism), or any one of any other socially useful goals that could make us more productive. And if we become more productive, we can reduce the debt as if by magic (kind of, relatively speaking). By growing out of it. But what fun would that be? Sort of like Eisenhower and the 1950s, but woke. Imagine a Woke Republican. Who spends your money. We don’t want spending, do we? Give us back Flint, rural hookworm, and Covid-19. Keep us great.
We have to have rational, educated conversations about taxes, government spending, efficiency, social cohesion (yes, Mrs Thatcher, there is a Society), rent seeking, consumption versus investment, incentives, property rights, all them boring things that they made you do in Econ 1. But you all know that stuff, right? You had it in high school. Your football coach covered it. And, bless your heart, you got a 4 on the AP test.
And you wonder why a pandemic is killing us?