Sunday, October 13, 2013

Raise the Debt Ceiling Already.

"Odd words for a libertarian," I hear you say.

No, not really. I'm used to living in this warped reality built by the Republicans and Democrats. The plain fact of the matter is that it has to be raised. There really is not a viable option, and all of the negotiating parties know that for a fact... so the outcome is a foregone conclusion, and it is the discussion that's a farce.

Here are some facts:

FACT #1: You don't even need a source for this one. Just first-grade arithmetic. Unless we actually balance this year's budget... and by that I mean we reduce the number of dollars spent to be the same or less than the number of dollars actually raised through taxes, tariffs, and fees... then we are going to hit the debt ceiling. In other words, any discussion of the debt ceiling is useless until we first solve the problem of the deficit.

FACT #2: This should be obvious, but it is the deficit and not the debt ceiling that is our problem. There would be no discussion or even thought of the debt ceiling were it not for spending money we don't have. Some folks don't have a problem with deficit spending... they argue that the Federal government is effectively immortal and can run a deficit forever. They forget that outrunning our debts is a sucker's game. It assumes you're going to die before somebody comes to collect. And when you're immortal, somebody WILL come to collect.

FACT #3: Neither the Republicans nor the Democrats have any proposal whatsoever that comes even remotely close to solving the deficit this year. Nobody in government has actually balanced the budget, and private attempts to do so are draconian. (Yes, back in March Paul Ryan declared on the House floor that the House of Representatives passed a balanced budget, but this is taking liberties with the truth. The plan is actually over a 10 year period... which does nothing about the debt ceiling this year.)

FACT #4: It is true, though, that so long as the debt of the US Government is issued in fiat currency... that is, dollars created by the US Government, then it is impossible for the US to default on its debts. ([source]... [source]... [source]... [source]... you get the idea). So don't stress over that... that's the problem either. If the government is pumping trillions into the economy, where is it going? The problem is what will happen should all that money that's being pumped into the system make it to general circulation. There's pressure for that to happen. The politics of envy are such that Americans look with disdain toward the broadening gap. Hamburger-flippers want $15 per hour because they can't tell the difference between an entry-level position and a career. Let that money into circulation and rampant inflation will result. A $10 gallon of milk could be cheap in the near future. But the government will still be able to pay on the debt. The problem then is that the currency will be so devalued that no one will want it, and those that invested in the US would find that they lost money on the gamble, even though they were repaid in full. Our economy would collapse, as has every undisciplined economy running under fiat currency since the time of the Caesars.

FACT #5:  Instantly balancing the budget would be disastrous. It would force the immediate closure of numerous government agencies. While I agree that they should not only be disbanded -- and go the extra step to say they shouldn't ever have been created in the first place -- I think it's pretty obvious what happens if you don't get rid of them in as orderly a fashion as you created them. Dumping millions of brand-new jobless people onto the open market at once isn't going to solve the problem. They'll just all wind up on the dole, and the system cannot handle it. Deficit spending would continue, to handle the load.

So stop pretending you have a choice. Just shut up and raise the debt limit. 

Then everybody sit down like adults and start reducing spending. Really reduce spending, and don't just play at being clever idiots with word games about how smaller increases are "cuts". They're not cuts.

Get rid of the waste, even the things you love. Some things are simple: get rid of spending for the arts. I love the arts. So do millions of people. They'll do fine without the government. The Native Americans will do fine without an Indian Arts and Crafts Board. "Big Bird" receives most of his funding from non-government sources. Cut it. Private donors will still contribute. States will still contribute. And unlike the Federal government, States must live within their means, as they don't have the power to speak money into existence.

Get rid of non-constitutional agencies. We honestly do not need a Federally-funded cabinet-level Department of Education. For one thing, it hasn't even done what it was supposed to. States are fully capable of handling education needs, and are also capable of forming National committees without Federal involvement. Let them do it. The Department of Energy needs to go. It's mission is to "advance energy technology and promote related innovation in the United States." In other words, they seek to re-invent the incentives that exist in the private sector completely independently of their existence. In OTHER words, it's the "Department of Useless Busy-work". Get rid of it. I would also lose the Department of Housing and Urban Development. Life in "the projects" has done as much damage to low-income Americans as any other cause. Vice President Al Gore, referring to public housing projects, declared that, "These crime-infested monuments to a failed policy are killing the neighborhoods around them." In 2006, The Village Voice called HUD "New York City's worst landlord" and "the #1 worst in the United States." "Lydia D." has dedicated an entire blog to demonstrating exactly why "HUD Sucks". Scale back military spending, not by reducing support of military members and their families, but by reducing foreign intervention. Military headcount is the easiest to reduce... first you send the National Guardsmen and Reservists home. They already have jobs. A great many of the rest will fall out as their enlistments are up. Stop wasting money in the War on Drugs. I mean that exactly as it's said. Look at what's valuable and what's a waste. Preventing the illegal sale of heavily addictive and destructive products? Check. Paying to incarcerate and feed casual marijuana users for years at a stretch? Waste.

Billions and billions of dollars can be saved by eliminating such wasteful spending. And YES, I count all of these as "wasteful" in that they either duplicate effort,  are ineffective, or are just plain unnecessary. Even where some value is realized... we're billions of dollars in the hole, folks, and some difficult choices have to be made. And that includes reforming and simplifying the tax code, and raising some taxes by eliminating some subsidies, deductions, and credits.

They're not "difficult choices" unless they're difficult. Get it?

But this shouldn't be done in a haphazard fashion.Scale back the missions of the departments and agencies, from aggressive spending, to monitoring and regulation, while reviewing all regulations, cutting out those that are non-essential, and transferring the oversight of those that are deemed essential to smaller agencies.  Reduce headcount through attrition and planned reductions.

Each reduction of Government scope will produce greater-than-expected economic gains. I believe that these people, moved to the private sector, will actually create new economic opportunities and raise the GDP, thus raising revenues for the government as these people become net producers, rather than net consumers, of tax revenue.

So do it, and do it right. But don't think for a minute that the debt ceiling is really at issue.

Here, have some fun:
warning: you cannot beat this thing by being a nice guy. Regardless of your ideology, you will have to make decisions you do not want to make.

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