Fiscal cliff posturing ignores revolutionary imperative

As we near the fiscal cliff, we should be asking about real alternatives, not worrying about our credit rating.

WASHINGTON, December 9, 2012 — As we approach the edge of the fiscal cliff and ponder the illusory $560 billion cut in the federal deficit built into the great compromise our brilliant rulers created when they last ran out of borrowing authority, we may think there is a silver lining in the inevitable slowdown. After all, that’s a sharp deficit cut, even though the CBO says unemployment will go up and GDP will fall.

A decline in the deficit means that a further downgrade of America’s credit rating will be avoided. That means we can borrow even more, and get farther into debt, and continue to spend trillions more than we take in – at least until the spenders in D.C. run out of money and have to raise the debt limit again, a couple weeks after the fiscal cliff is breached. 

But the credit rating of the US is of no consequence. The world knows that the US is broke, and going deeper into debt every day. Government spending is not a solution; it is the problem, and raising taxes does nothing to fix the problem. Government spending is always financed by the productive people. Welfare is not productive. Government is not productive. 

Government, in fact, is almost always anti-productive. Not only are all of government’s actions in restraint of freedom (some “freedoms,” like the “freedom to kill,” are also anti-productive, and discouraging killing is a legitimate, though very small function of government – though not of the federal government), those actions are performed by the world’s largest workforce.

It is a well-paid workforce, with terrific benefits and retirement plans, and it pretty much always grows, regardless of the economy. And before these hordes do any of their spending, they pay themselves – with money that other people had to earn, and in spite of them. They spend our money on stuff that’s overpriced, because of regulations and procedures that are built into the system, and must be paid for – by other peoples’ productivity, with other peoples’ money. 

A lot of the arguments on this subject are moot. Take GDP, for instance. So what if it falls? That depends. Since one of the components of GDP is government spending [see Lies, Damned Lies and Statistics: GDP], if government spending declines, so will the GDP. That’s a good thing, if you’re a responsible adult.

Having a growing GDP because of increased irrational spending is not a brilliant idea, though that’s what our rulers have relied on — a misleading technicality — to get us out of this recession. Similarly, as some have suggested, another bad idea is to cap spending as a percent of GDP. Again, the math is circular.

Worse is the idea that we (the government) should spend what we (the people) can afford. I argue that we should spend only what is legal, and further limit that by what is absolutely necessary. What is legal is defined in the Constitution; and if something authorized by the Constitution is no longer necessary, we can delete funding for that, too. (If “we can afford more,” let the people spend it the way they want; it’s their money.) 

If it isn’t specifically authorized by the Constitution, it isn’t legal for the federal government to do. That means we should immediately send most federal employees home, stop paying them, and cancel their pensions. Sure, it will be a hardship … but PEOPLE, WE’RE BROKE. 

It isn’t even a matter of continuing to borrow; it’s a matter of intrinsic honesty. All the borrowing we’re doing now, and have done in the past several decades, has been dishonest, because those doing the borrowing have never had any intention of paying it back.

The deficit and debt themselves aren’t the underlying problem. The problem lies in the fact that we have no way to close that deficit, no way to do anything but grow that debt. Taking more and more from a dwindling productive sector, in order to feed the nonproductive (welfare) sector or even worse, the anti-productive (government) sector, is absolutely, positively unsustainable, no matter how many non-producers want and vote for more, more, more. 

So, the debate (or rather, posturing) about the fiscal cliff is all window dressing. We’re complaining that the toilet in the caboose isn’t working, when the engine has already gone off the track and into the river. The only solution is to disconnect the surviving productive cars from the wrecked governmental engine, and bid the engineer and his support staff (our ruling elites in D.C.) adieu. 

It is, after all, the right of the people to alter or abolish such a government. In fact, it is our duty, to ensure the future of our nation.


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Tim Kern

Tim Kern taught economics for fifteen years, and discovered that understanding life is easy; it’s recognizing reality that takes practice. He holds a music degree, and later earned an MBA in finance from Northwestern University. He has lived across the US, and now makes his home in Anderson, Indiana.

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