View 683 Friday July 15, 2011
Sowing the Wind
Debt Ceiling and More Government Services We Don’t Need
The President insisted on enormous deficit spending as a stimulus to restart the economy. It didn’t work. The shovel ready jobs were not ready, and much of the money was put to questionable uses, but one things that was predictable in advance happened as expected: the deficit went up and up. Now the President is saying that without a raise in the debt ceiling we are ruined. He will have to shut down much of the government, and of course he will start with the things that hurt most.
Of course the US can’t default: the cost would be enormous. The Deficit Dance continues, and so long as we have the current administration there’s not much to be done. The Republicans will have to make the best deal they can.
One deal they probably can’t make is an off switch. There ought to be a Commission of Thrift which has this power: it can select government programs that are not needed and turn them off. The Congress would have the right and power to turn them back on, but it would have to do that: without Congressional action the designated “services:” would be turned off, and those involved would either have to find new jobs or be laid off.
We’ve already shown a few here. The Federal Department of Agriculture inspectors whose job it is to see that stage magicians have a federal – not state, not local, but Federal – permit if they use pet rabbits in their stage act, and people who sell rabbits as pets – not as snake food, or to restaurants, or to slaughterhouses, but as pets – must have a Federal license. This law is a great candidate for repeal by the Commission of Thrift. Another is the Department of Education Inspector General’s SWAT team. If the DOE IG needs to have arrests made, let him get a US Marshal, or perhaps ask for cooperation from the local sheriff; no need to hire, train, and maintain armed agents in the Department of Education.
I am sure everyone here can list more such programs that we simply can do without.
Today’s Wall Street Journal has found a very good one. See “Cellulosic Ethanol and Unicorns”. The EPA has mandated that six million gallons of ethanol generated from cellulosic sources like wood chips and switchgrass must be added to the automobile fuels sold by US gasoline suppliers. There’s only one problem. There is no cellulosic ethanol. Zero cellulosic ethanol is for sale. The last authorized supplier of cellulosic ethanol has shut down, and there don’t seem to be any new ones making applications. Meanwhile there are government officials who are standing by to license new suppliers assuming any appear. Oil refiners who sell gasoline will have to buy six million cellulosic waivers. Someone must sell those waivers, and inspectors must see to it that the waivers are bought. I don’t know what the expenses will be for all this, but it must come to tens of millions of dollars. Everything does. The whole gasohol subsidy program would be a good candidate for repeal, but surely the requirement that oil refineries buy waivers for a requirement to use six million gallons of a product of which zero gallons are made for commercial use would be an obvious candidate for elimination?
Nothing of the sort will happen, of course. If government shuts down you may be sure that the government will lay off Park Rangers long before eliminating the EPA inspectors who make certain that oil companies buy six million waivers for the mandate to use a product no one makes.
And the dance goes on.
You will have noticed that the Democrats had two years with majorities in both Houses to raise taxes and reduce the deficit. They used those years to increase spending and grow the debt, meaning that the portion of the budget that must go to debt service grows, and there is less money to spend on anything else. The trouble with socialism and the command economy is that you run out of other people’s money. Most everyone outside Harvard understands that. Reality is demonstrating it to the rest of us: the enormous stimulus packages were supposed to bring us economic recovery. Recovery Summer came and went. Now we have the Debt Limit Crisis. The new game is to blame it all on the Republicans and the era of the Country Club Republicans after the implosion of Speaker Gingrich. There’s a lot of truth in that, of course. I have been saying that the Country Club Republicans sow the wind since the inauguration of George W. Bush (Bush I). The problem is that if the Country Club Republicans were doom, their Hope and Change replacements led by Pelosi were Doom, Death, and Despair.
If something cannot go on forever it will stop. The United States spirals rapidly toward the situation in Greece. The European Union meets again to bail out Greece. They will have a price. Perhaps the People’s Republic of China will help bail out the United States. We can guess some of their price will be Taiwan; but be assured that will not be all of it. We have sown the wind. We will reap the whirlwind. There is a way out, but the way will be hard and not pleasant: easier to foist it off for a while, and continue the Dance.
Yes We Can! Yes We Can!
We have errands that will take up most of the day. This evening they start shutting down the 405 Freeway and Los Angeles believes itself to be under attack for the weekend. It’s Carmageddon. I hope it’s like the Year 2000 Crisis rather than a big earthquake. Of course nothing stops us from having both, but hope springs eternal. Those interested in global warming may find find this bit on undiscovered underseas volcanoes worthwhile.
I may not have been as clear as I thought about the slide into a command economy. No, we are not there yet, but we are on dangerous ground. The Republican post Millennial Spending Spree coupled with needless wars – guns and butter – tipped us in the direction of a tax, deficit, spend, deficit, raise taxes death spiral. The Republicans were not trying to create a command economy. They thought we could afford guns and butter. They thought the economy was robust enough to survive all their new entitlements, which were supposed to make them popular and ensure that they would stay in command. The bubbles began bursting. The nation was horrified at the mounting deficits coupled with enormous tax breaks (which the Republicans had set up in part to ensure that there would be non-command investments). The nation threw the Country Club Republicans out. Turn the rascals out.
Unfortunately that did not bring in normalcy and the dismemberment of the spending cycles. Instead it brought in the Pelosi /Obama group. Whatever the sentiments and wishes of most Democrats, the leaders were not horrified at the move toward a command economy. That is the goal of a number of liberal Democrats. The US should be much more like Europe, with the government controlling a lot more of the economy and allocating the resources according to the needs and enjoyment of the populace. Greater good for the greatest number. That sort of thing. The problem is that in order to distribute wealth there has to be wealth to distribute. The ratchet continued. More spending. More deficit. The remedy to that is more taxes. More government control of the economy. A spiral to a command economy.
That is where we are now. We will not get out of it by cuts alone. There will have to be some tax increases: but those must be coupled with a sharp turn toward a road that leads to less government, less government control over the economy, and this in a time when debt service costs more and more, and so long as the deficit must be financed by borrowing, the proportion of government control continues. That is a spiral to a socialist state. There are those who like this. History has not been kind to such states – they are generally not stable. They are wonderful so long as they are rich, but eventually you run out of other people’s money and have to start taking money from everyone.
And that is where we are. Yes, there will have to be tax increases; the deficit can’t be paid off by cuts along. But there must be cuts. There must be a turn toward the notion of controlling spending; of cutting out the “services” we can’t afford any more. I have listed some of them. There are thousands more. The whole notion that if we have some money it ought to be spent on entitlements has to be turned on its head. The notion that if there is any surplus in the economy it is the right of government to take it and spend it on entitlements must be shed, or we will continue the death spiral. And note that in all the Kabuki dancing here there has never been anywhere in the main debate a word about needless entitlements, entitlements that we can no longer afford, and very little about the concept of property. It is becoming more and more taken for granted that if there is money, the government has more right to say how it should be spent than the people who own the money; more and more taken for granted that “the rich” do not have a right to what they have, because they do not deserve it.
That is a command economy.
