Does the US Have a Fiscal Crisis?

[georgephillip]

Yes, that's what the Big Government types keep saying.

We've NEVER borrowed this much money for expanding government in a time of relative peace. The spending is not due to the wars in Iraq and Afghanistan, it's simply to expand government at the expense of the private sector and taxpayers.

Peggy Noonan had a good column this week that sums up the denial quite well:

I think some of the answer has to do with what, for lack of a better word, I’ll call crisis-ism. This is a condition in which you don’t know you’re in crisis because you’re always in crisis, you’ve always been in crisis, and you’ve always gotten through, so what the heck. Crisis-ism is the inability to apprehend that this time it’s different, that this time the crisis is an actual crisis.

There are senators and congressmen who’ve been on the hill for 10 and 25 years, and from the day they walked in, all they heard about was the budget crisis. “This spending will kill us.” But it never did. So maybe it wasn’t so bad, and, ergo, isn’t so bad. They are inured to warning. You can tell them 10 different ways that we’re in crisis and they’ll think, “Some think-tank guy told me that 20 years ago, and we’re still here.”

Another reason for budget denialism is that everyone now in Congress lived through the greatest expansion of wealth in the history of man on earth. It happened here, in America, in the past 30 years. And we were rich even before that. But when you grow up in a time of constant expansion, when you grow up immersed in the assumption that we are rich and will always be rich, that we’re powerful and will always be powerful, you start to think that America can take any amount of damage and still continue. This is called optimism, but it is not optimism, it is Rich Boy Syndrome. A boy is lucky enough to be born to rich parents who are themselves the product of generations of wealth going back as far as the eye can see. But he never got into the habit of making money, never learned to respect it, and never felt protective of the system that allowed it to exist. So the money went away. Rich Boy Syndrome is thinking wealth will just continue no matter what you do. A lot of members of Congress have Rich Boy Syndrome. They think they can do anything and America will always be rich.

A final reason is simply human. It is really convenient and pleasant not to see a crisis, because if you don’t see it, you don’t have to do anything about it. You don’t have to be brave, you don’t have to put yourself on the line, you don’t have to lead. You can tell yourself you don’t have to be brave and lead because really, at the end of the day, despite all the screaming, there is no crisis....

Peggy Noonan: Home

Peggy doesn't mention how the richest 1% of Americans doubled their share of national income and wealth during "the greatest expansion of wealth in the history of man on earth."

Robert Reich on why record levels of government spending are required to repair the damage caused by Peggy's WSJ-reading class:

"The truth is that while the proximate cause of America’s economic plunge was Wall Street’s excesses leading up to the crash of 2008, its underlying cause — and the reason the economy continues to be lousy for most Americans — is so much income and wealth have been going to the very top that the vast majority no longer has the purchasing power to lift the economy out of its doldrums.

"American’s aren’t buying cars (they bought 17 million new cars in 2005, just 12 million last year). They’re not buying homes (7.5 million in 2005, 4.6 million last year). They’re not going to the malls (high-end retailers are booming but Wal-Mart’s sales are down).

"Only the richest 5 percent of Americans are back in the stores because their stock portfolios have soared. The Dow Jones Industrial Average has doubled from its crisis low. Wall Street pay is up to record levels. Total compensation and benefits at the 25 major Wall St firms had been $130 billion in 2007, before the crash; now it’s close to $140 billion.

But a strong recovery can’t be built on the purchases of the richest 5 percent."

 

[Agit8r]

But a strong recovery can’t be built on the purchases of the richest 5 percent."

that's true. plus plutonomy is unAmerican

 

[georgephillip]

of course we have a problem. Dems want to spend more. Reps want to tax the wealthy less. So they compromise and do both. And how is this financed? With that old flat tax called inflation!

From Wiki:

"An inflation tax is the economic disadvantage suffered by a holder of cash and cash equivalents in one denomination of currency due to the effects of expansionary monetary policy, which acts as a hidden tax that subtracts value from those assets.

"Many economists hold that the inflation tax affects the lower and middle classes more than the rich, as they hold a larger fraction of their income in cash, they are much less likely to receive the newly created monies before the market has adjusted with inflated prices, and more often have fixed incomes, wages or pensions.

"Some argue that inflation is a regressive consumption tax."

It's been pretty hard to miss the Federal Reserve's bias toward holding inflation in check at the expense of high unemployment levels.

Something else that probably won't change if we continue "choosing" between Republican OR Democrat at the polls.

 

[georgephillip]

But a strong recovery can’t be built on the purchases of the richest 5 percent."

that's true. plus plutonomy is unAmerican

Do you think Alexander Hamilton would have agreed?