Saturday, February 06, 2010

Once again we see liberals' "fiscal responsibility"

Some schmuck, a Democrat, campaigning for local office was touting himself on the local news as fighting for government that's more transparent, more responsible, more accountable. As one example, he fought an 8.9 percent tax increase down to...8 percent. Yeah.

On a national level, the Democrat are again demonstrating their commitment to "fiscal responsibility." That is to say, "fiscal responsibility," as in all cases with government, without exception, means that the government spends, and "we the taxpayers" are given the responsibility of paying for it. Republicans were more than bad enough, raising the national debt "ceiling" whenever they needed more money to spend, and they were in no way hindered by Democrats who were only too eager to join in the frenzy -- including then-Senator Obama.

The House just voted to raise the national debt ceiling by $1.9 trillion to a nearly inconceivable $14.3 trillion. The Senate already passed it, so it's now ready for Obama to sign into law. Since 1917, federal law has set a "debt ceiling" for Congress, which is simply amended by new legislation. Of what use is a restriction when the entity being restricted is the one setting the rule? The analogy "Dad, I need to push my curfew back to 3 a.m." isn't quite right, because that phrasing is one of seeking permission. The federal government's effective tone is "Dad, I'm pushing back my curfew."

The previous increase was via H.R.4314 ("To permit continued financing of Government operations."), sponsored by the execrable Charlie Rangel. It was passed by Congress last December 24th and quietly signed by Obama on the 28th. It was largely ignored by the mainstream media, as was the fact that it was far from the first time Obama broke his campaign promise to wait five days before signing bills, so "the people" can view it. While mainstream news bombarded us with "health care reform" twaddle, H.R.4314 quietly raised the debt ceiling from $12.104 trillion to $12.394 trillion. Democrats were originally seeking $1.8 trillion, so how "fiscally responsible" that was! And "merely" a few hundred billion dollars is no problem, right? The Federal Reserve can always create new money to buy more Treasury bonds.

There's also the nonsense of "PAYGO," that supposedly the feds will be restricted to spending money only as it's coming in: any spending increases must be balanced by spending cuts elsewhere, or increases. And which do you suppose will happen?

We should not be surprised at any of these lies being fed to us. This is the age where Obama can say with a straight face that he'll use TARP money, by definition borrowed money, to reduce our debt. That never came to pass, of course, and quite the opposite: Obama recently abandoned that idea and wants to lend $30 billion of TARP money to small businesses.

So much for your promises
They died the day you let me go even before you were inaugurated

Even more apropos words are later on, for every idiot who thought Obama could de:

Woke up to reality
And found the future not so bright
I dreamt the impossible
That maybe things could work out right
I thought it was you who would do me no wrong
And now you've given me, given me
Nothing but shattered dreams, shattered dreams
Feel like I could run away, run away
From this empty heart

Lending TARP money is utterly irrational. (It's more importantly immoral because taxpayers will be forced to repay the borrowed money that they didn't want lent out, otherwise they'd be lending it themselves without government prodding them, but that's a subject for another post). As I recently blogged, irrationality with other people's money is because it's other people's money. "Rational" does not mean the decision is always the correct one, but it means the decision was made using a logical, methodical process to avoid systematic errors. Paraphrasing Milton Friedman, government is spending Other People's Money on yet other people, so why should any care be taken how much is spent and on what? The private sector doesn't want to lend to these small businesses for a very good reason: lenders are afraid of not being paid back.

Some time ago, a store owner I know lamented that his credit line was cut to a third of what it was. He's a nice guy, but "nice" doesn't guarantee sales, and his particular business is very dependent on people's extra income to buy non-essentials. Thus it's perfectly understandable that his bank decided not to trust him with a high debt limit. It started questioning his very business model of recycled debt. In a speech last year, Obama claimed that the federal government needed to stimulate lending so that companies can meet payrolls. Ask yourself: how can any sustainable business survive on the idea of perpetual borrowing to meet its obligations? That's understandable for the first few years while it's being established, but not continually. It defies all business sense, but it fits with the idea of government spending being irrational.

Of course, the real answer is for government to stop taxing businesses, which would then not have to worry about borrowing money, but heaven forbid that anyone should keep his own property.

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Blogger Underground Carpenter said...

Hi Perry,
I thought I was the only guy to wonder why a business should need a loan to meet their payroll. In the old days, only the most solvent people launched businesses.
I came across your blog when I was googling for a Bastiat quote. Nice to see another admirer of his.


Sunday, February 07, 2010 7:20:00 PM  
Blogger Perry Eidelbus said...

Always good to make another friend in the spirit of Bastiat! I was introduced to "The Law" in 1997 and was fascinated by St. Frédéric's presentation as rights existing before the state did, but at the time I didn't understand the arguments against protectionism. Then as an economics major, I was reintroduced to Bastiat via "What Is Seen." After that, the danger, the pure immorality, of protectionism became clear.

That troll doesn't dare show his face here, but I see his IPs every so often in my visitor logs. He's recently surfaced at Alarming News again. I comment there somewhat regularly, and also at Three Sources. Once in a great while at QandO.

Tuesday, February 09, 2010 8:10:00 PM  

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