I call your attention to an article
“Our Democratic Debt” in the July 21,2014 issue of National
Review by Christopher DeMuth.
The subtitle is “We're borrowing to fund personal benefits not
public goods”.
The Debate
If you spend any time at all listening
to economic debates and opinions, you will mostly encounter a
cacophony: Keynesians and Austrians, Krugman and Friedman, Democrats
and Republicans, liberals and conservatives, Fed hawks and doves.
Sure as shootin', you will not find consensus on the US budget
deficit or the Federal debt.
The Deficit of Yesteryear
The only time the US ran substantial deficits was in time of war, and to a lesser degree banking crises and natural disaster. The problem would pass, and the debt would be paid off, more or less.Where the US Gov't Used to Spend Its Money
Up until recent decades, the only
substantial expenditures were on bridges, roads, dams, and the like.
These are capital expenditures that all future generations would
benefit from. What limited spending was the rather finite number of
these things that could be built.
Then Came LBJ and the Great Society
The “war on poverty” heralded a dramatic shift of the role of the Federal Government in our lives, and I am not sure that everyone understands this. I certainly did not until I read this rather remarkable article. Now, rather than building infrastructure, whose expenditure is limited, Uncle Sam now gives out free money to the “needy”, whose demands are infinite. AFDC, food stamps, Medicare and Medicaid, welfare, SSI, ad nauseum. The problem is that these things are consumed immediately. Our descendants will not benefit from this type of spending, but they will foot the bill nevertheless.Federal Debt and Budget Deficit—the Next Generation
The problem is that once people realize that they can vote themselves money from the public treasury, it becomes impossible to do anything about it (I think it was de Tocqueville who said this; if I am wrong, please sound off in the response box below). Therefore, it is hard to see anything other than ever increasing debt and deficits until the end of time.In any event, you should read the article.
