Steadfast FinancesAmerican Demosclerosis: Borrow & Spend the New American Way

American Demosclerosis: Borrow & Spend the New American Way

Filed in Politics , Taxes 2 comments

Call me a cynic, but if ever there is a better example of how demosclerotic the “greatest country in the history of the world” [via Mitt Romney] really is…

Top senators from both parties indicated Sunday that a deal was likely soon on temporarily extending Bush-era tax cuts for all Americans, along with unemployment benefits that have expired. - via CNN

So… to pay for government benefits we can’t afford (stigmatized as funemployment)… we’re going to keep temporary revenue [Bush tax] cuts in place (stigmatized as tax cuts for the rich).

For the record, I’m all for for tax cuts when that money is re-injected into the economy (e.g. trickle down economics) as well as giving a few bucks to feed starving people when they’re unemployed, but it is fiscally insane to run a deficit for 30 years while cutting taxes claiming prosperity when all your really doing is borrowing against the future hoping inflation and a locked interest rate will solve all your problems. If you did this with your personal finances, it would be like analogous to taking out home equity loans every year to finance consumption, and if/when your budget turned into the red, you continue to take out additional loans even though you don’t have the cash flow to repay the loans.

When you distill the political chicanery down to a common denominator, this entire process is nothing but a high stakes game of Let’s Make A Deal where one side leverages people going hungry vs. while the other side leverages more money in the bank.

As the Simpson-Bowles Deficit Commission infamously put it: the “Greediest generation” might be an adequate stigma indeed.

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Posted by CJ   @   6 December 2010 2 comments
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2 Comments

Comments
Dec 7, 2010
9:02 am
#1 ctreit :

I guess the fiscally responsible new members of Congress are not there yet. Will the fiscally responsible people ever show up? Or will we wait to become fiscally responsible until our back is against the wall? My best guess is that we will wait.

Dec 7, 2010
11:28 am
#2 Matt SF :

It will take a spike in interest rates to wake them up. When, or if, people can’t borrow in the low single digits, that will begin to cause some serious discontent among voters, and be passed up the grapevine.

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