The rules of deficits, debt, and digging

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Column by Jim Flynn

A recent column in USA Today was titled “Don’t believe the hype about our national debt.” They gist of the article was that Washington spends too little, not too much.

The author of the hype alert was Sally Kohn, founder of Movement Vision Lab, a think tank dedicated to making the world safe for radical ideas - as if it weren’t already. Ms. Kohn appears on many TV and radio talk shows.

Ms. Kohn says concern about the fourteen and a half trillion dollar national debt is exaggerated. After all, carrying significant debt is considered a good practice among successful businesses. It’s quite contradictory for a liberal to infer that government should be run like a business.

Ms. Kohn is comfortable with the $14.5 trillion national debt level because it’s approximately the same as the gross domestic product (GDP). That’s the total value of all the goods and services generated by the private economy in a year.

After all, Ms. Kohn says, successful companies like IBM and Boeing borrow twice or even four times as much as they earn in a year. And there’s the hype in Ms. Kohn’s argument about hype.

Government doesn’t “earn” anything. Government spends - tax money, printing-press money, and borrowed money.

Government has no GDP. It doesn’t produce goods and services with the intention of creating profits. The most gross aspect of Washington government is the size of its bloated budgets and bureaucracy.

Ms. Kohn has a valid argument that federal revenue (taxes) is at a comparative low because of tax cuts during recent years and a lengthy recession. But that’s only half the story. Out-of-control spending is the other half. Our federal government, legislative and executive, has no fiscal discipline.

Based on half an equation, Ms. Kohn insists the federal government, must be “the spender of last resort.” It must borrow money to “invest” in future opportunities, particularly education and infrastructure - debt be damned.

“Aye, there’s the rub” as Shakespeare said with Hamlet’s tongue, meaning there’s the catch; there’s the dilemma.

With good cause, conservative Republicans believe more revenue, whether additional taxes or borrowing, will be spent on new projects and new programs which will swell the federal bureaucracy and buy votes for the Democratic party.

Liberal Democrats believe lower taxes and less federal spending will add more trillions to the uninvested dollars being hoarded by large corporations and investment banks, and will be used to fatten the pockets and pensions of their managers, instead of creating jobs.

We believe the answer to “the rub” lies in the rules of holes: 1. If you find yourself in a deep hole, stop digging. 2. Find a way out before someone backfills the hole. 3. Cease the stupidity that caused you to dig the hole in the first place.