Ready, Debt, Go
In honor of the new Republican majority I would like to take today out to discuss— in basic and easily communicated terms— a favorite topic of conservatives everywhere. Today I devote to debt, particularly public debt, and the problems therewith. And while virtually all of Sarah’s readers except for trolls are probably already well-versed in this issue, my goal here is to sum it up in sufficiently plain and direct terms that it can only be misunderstood with great effort. Granted, there are layers of unexplored obtuseness out there that assure no one can get through everyone’s head, but I’m going to give this my best shot.
The thing to bear in mind in the ensuing discussion is this: not only are Democrats not serious about combating public debt, but they are ideologically and structurally interested in its expansion. Understanding that fact makes it very easy to comprehensively predict and contextualize the entire response of the left to debt.
With that said, let us start by discussing the basic dynamics of US debt. Economists generally agree that debt accrued by the United States is different from other debt. Leftist economists try to use that fact to excuse virtually any fiscal behavior— at least, provided they like the politicians doing it. But in the basics, US debt is actually very similar to debt you might owe yourself, to a local business or another person. The difference is largely in scale and inertia. Scale is obvious. Even if you had a vaunted Amex Black, you’d be hard pressed to borrow a trillion-with-a-T dollars. Inertia is a little more complex. It refers to the fact that things that would happen very quickly in dealing with your debt happen quite slowly on the scale of nations. For example, you, individually, as a person, have a credit rating. So does the United States, except that it changes more slowly to reflect the general attitudes of the electorate driving the borrowing rather than the personality of an individual. That’s a driver of inertia. It’s also rated by several independent agencies, rather than one single one, meaning in any scenario that there will always be an agency that reacts first and an agency that reacts last. That’s also part of inertia. And because loans are made government to government, a massive bureaucracy has to request the money and another, probably even more massive bureaucracy has to give it. Signing this vast sea of things in triplicate is yet another contributor to inertia.
This much is still true, however, and whatever Paul Krugman says about the matter. People who loan you money always do so with an expectation of being paid back. There is no such thing as infinite credit. China does not loan us money out of the goodness of its heart and regular interest checks, sizeable as they are, pale in comparison to the scale of the debt we’ve accrued. If the country is run as Democrats want it to be, with debt run up infinitely, at some point the countries loaning us money realize we have no intention of ever paying back the principal. They realize it partially because credit rating agencies explain it to them in detail, with graphs. When that happens, other countries stop loaning us money. The reason it hasn’t happened yet is because, as I said, this process is considerably slower with countries than with people (though, mark you, we have already had one credit downgrade under Obama). Democrats would like you to believe that, because it happens slowly, we can round up and say it doesn’t happen at all. In the grand scheme of things it’s like swearing the sun doesn’t exist during the nighttime. Tomorrow does eventually come. In fact, I can tell you precisely what it will look like.
If other countries stop loaning us money then we stop being able to cover our debts, whether the people in government like it or not. Likely as not, they’ll blow on the gravy train’s caboose with a huge round of inflation to get a little past that point. That is to say, they’ll print money that isn’t representative of any equivalent creation of value in the world and explicitly hope that the people cashing those checks are fooled into thinking it’s real money. Which they will be, for anywhere between a day and a month. And then after that the currency is devalued and the checks from your favorite entitlement program just stop cold. At around which time the Democrats would blame the collapse of the government on a 0.001% decrease in the budget won by the Republicans after months of bitter arguing a year earlier. And because knowledge of these simple economic facts is shockingly rare, if not actively obscured by the, ahem, media-governmental complex, an embarrassingly large number of US citizens will believe it.
Largely this is done because anywhere that large amounts of money are being thrown around there is opportunity. As we saw with Soylandra, and Obamacare waivers for lobbies, government officials tend to give the money to their friends. And given that an accepted way to make friends with a Senator is to write him a large check, that money is not going only one way. This is one reason Democrats like debt. In directing how the debt is spent they can put away a tidy retirement. They estimate, probably correctly, that no one will ever stick them with the bill for any debt they run up, and in the meantime they can leverage what they make to buy tangible assets that keep their value.
Of course, not all Democrats are planning to loot the stream of income and leave a smoldering ruin. Sometimes their goal in spending money is predicated on a desire to bring the rich low. Particularly in those more versed in the class-warfare doctrine of liberal politics, the theory runs thus: all money, by right of dollar bills being printed by the government, belongs to the government (these are usually the same politicians who are fuzzy on the difference between fiat currency and the value it is meant to directly represent). And the rich are evil, by right of being rich. This is because, in their view, all wealth is accrued by charging someone more than something is actually worth and pocketing the difference. The idea that the value of an item is actually increased when a place like Wal-Mart makes it available in your neighborhood, rather than making you drive to the production plant in Boise, Idaho, usually never occurs to them. (Or, if it does, then they believe there is some other way of measuring the value of the item than the price people are willing to pay for it in a competitive market, usually relying instead on the gas and labor put into moving the item to a new place. That Wal-Mart deserves money for arranging for this gas and labor to be put into moving the item is still totally alien to them. But I digress). Wealth is therefore, to them, an accounting of how many times you’ve ripped off someone (their own wealth, miraculously, always excepted). Consequently they feel that emptying out the rich is a noble end in itself and are fairly unscrupulous in the means. There is a significant contingent of the left that believes in massive spending not in spite of the fact that it will bankrupt the country, but because of it. They hope that, if the country is made sufficiently broke, it will turn in on itself, strip the rich of their property, and use it for the public interest. Usually they believe this is the first step of a larger social transformation into an egalitarian society. As to the opinion of history, that is to say, the track record of reality, while a country can indeed be driven to the point of eating the rich, the promised transformation into an egalitarian utopia has never been seen. Also, as can be very easily proven by anyone wishing to go do the math, the amount you get by robbing rich people is always a tiny blip next to the debt accrued in forcing it.
A cynic might be quick to point out that the United States has one other way of ensuring credit, in the form of its military. Stupid as it sounds, we wouldn’t be the first to try using war to escape debt. We may have an example as recent as World War II. I’ve heard people argue that the construction of Nazi Germany was in part enabled by the sheer scale of the reparations demanded following WWI. The theory goes that one of many perverse incentives set up by this was that it made more sense for Germany to attempt to conquer the world than try to pay down its impossibly large debts. Of course, implicitly that means that when people bid for the US to lean on its military might as a way of securing its debt, they are bidding for the United States to become embroiled in (if not initiate) another World War.
I say all this as support of one, single point. When Democrats call for more debt they aren’t really doing it out of the compassion they state. And when Republicans, and conservatives in general, call for austerity, we do not do it out of personal dislike for the people dependent on government programs. Quite the opposite. If (really, when, unless we turn things around) the country suffers bankruptcy, massive inflation, war, or all three, as a result of these benighted fiscal policies, it will be the people most dependent on them that are hardest hit. Reduction in a controlled way is the less painful path. Now yes, I, personally, as a Libertarian, feel these programs should eventually be removed entirely, being wholly outside the federal government’s jobs of representing the United States as a whole to other nations and moderating interactions between states, I appreciate there will never be political capital to make such a move in one fell swoop. Gradual, long-term change is the only way to get such things done, at least in a way that sticks.
Nor is there any way of reforming the debt without cutting back on entitlements. In 2013 we spent a quarter of our budget on Medicare and Medicaid, and almost another quarter of it on social security. Defense, meanwhile, constituted less than a fifth, barely more than the amount we spend in Non-Defense Discretionary spending, which is to say, the government slush fund. Furthermore, defense of the country is explicitly a job of the United States government and an appropriate role of the federal government under the duty of “representing the United States as a whole to other countries”. The entitlement programs, just the two most prominent of which now represent, I must emphasize, almost 50% of the US budget, are not a legitimate role of government under that standard. And indeed, Democrats argue to cut defense not because they have any rational or constitutional reason for it but, once more, almost precisely because they do not. By that I mean that conservatives, who support defense spending because it’s one of the things government is actually supposed to be doing, are therefore loathe to cut it. Democrats hence propose cutting it mostly on a political basis, probably with little or any desire to get what they’re asking for. Rather, they realize that asking for defense cuts incenses Republicans, shuts down discussion by starting arguments, and thereby blocks cuts to the programs that actually are ballooning the budget. Hence, for whichever of the reasons driving their vested interest in expanding the debt, they enable it to continue expanding. The commitment to entitlement programs specifically is another sign that expanding debt is an end in itself. Entitlement programs have been noted since the days of bread and circuses to be notoriously difficult to get rid of, because people grow accustomed to the money and eventually find it impossible to live without. If your goal is creating an institutional debt problem they’re consequently the perfect tool. They also have the added advantage of often being redistributionist in nature, so they feed the doctrinaire Marxists too, by giving them lots of opportunities to draw battle-lines for class warfare. Something for everyone!
Democrats can do this without publically seeming unreasonable, because the army is the part of the federal government’s legitimate roles that is least visible in people’s day-to-day lives. Politically they also get to paint the Republicans as warmongers, which is a tasty bonus (Parenthetically, this is not to say that defense spending is always sane or efficient, or that we do not overspend on defense. It is to say that the Democrats really don’t care about that, except for a couple of died-in-the-wool idiot peaceniks. The rest pay it lip-service because it’s a convenient pretense.).
In the end it really is just this simple: Money has to come from somewhere. The left tells you otherwise only so they can direct the excess to themselves and cronies out of greed, or else act upon irrational ideological vendettas. To this end they work politically to ensure that debt is always being run up, especially in entitlements. Being foolish enough to believe the façade of political correctness overlaying this fact will lead to dire consequences, and indeed there is no world in which the free money does not, eventually, stop. It’s just that in some it stops the “easy” way, through controlled and managed expenditure reductions of the kind conservatives recommend, and in many it stops, well, the other way.
And for the most part, Democrats know it. They just find it more profitable to lie about it.