Deficits: world-shaking menace or irrelevant distraction?
New York mayor Michael Bloomberg became the latest big spender to dismiss concerns about the deficit, in the course of decrying sequestration as an unfair waterboarding of our beloved, endlessly benevolent government. "When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money," he mused, which means it's crazy to compare Uncle Sam's spendthrift ways with the manner in which a household or business manages its finances.
"It's the old story: If you owe the bank $50,000, you got a problem. If you owe the bank $50 million, they got a problem," the Mayor nattered on. But what if you owe a bunch of banks - some of which hate you and use your interest payments to finance aggressive military buildups - $400 billion a year, and then borrow another $800 billion from yourself, and print up a fresh pile of dollar bills every night in the basement? We can only hope to God that the world's credit agencies and investors didn't pay attention to this idiot.
Besides the obvious enough point that financing Bloomie's "infinite" debt costs very real, finite, mandatory money, the other thing about this sky's-the-limit borrowing flapdoodle I keep hearing from liberals is that they very obviously don't believe it themselves, and they will loudly tell you so... as soon as you propose pro-growth tax cuts or major tax reform. Then every lefty in America, right up to President Downgrade, suddenly transforms into a deficit hawk and begins shrieking about the irresponsibility of threatening the government's revenue stream. This is such a crucial concern that we can't even dream of risking a failure of the tried-and-true Laffer Curve, or gamble that growth from lower taxes will offset revenue lost to tax rate reductions.
So which is it? If we can run up infinite debt to finance food stamps, cell phone welfare, and Pentagon-subsidized Star Trek conventions, why can't we risk a little extra debt by cleaning up our embarrassing tax system - and unleashing the growth engines of America - by implementing a Flat Tax or Fair Tax? If we had done that in 2008, could it conceivably have added as much to the national debt as Barack Obama's wild spending spree? And instead of disappearing stimulus dollars - so ineffective by Obama's own estimation that he says we urgently need more infrastructure spending - we'd be the proud owners of lasting private sector growth, plus super-simple taxes.
If debt is no big deal and we can rack it up forever, why not launch the greatest economic stimulus of all time, right now, by zeroing out corporate taxes? Good Lord, imagine the dividends from businesses racing across sea and sky to buy into the American market!
So: sequestration is an unbearably painful but wholly unnecessary restraint to government spending, whose rising debt-service costs will soak up many times as much money as the sequester over the next decade, and we should happily keep borrowing money forever because deficits are trivial affairs, but if we do anything that reduces government revenue by a nickel the entire system will collapse. Why is there a single adult left in the United States who takes these people seriously?