The Debt-Sea Scrolls

The Debt Sea, that ocean of red ink that threatens to overflow its banks and inundate every nook and cranny in America from Main Street to Wall street, is bordered on the south by the Potomac River, to the east-southeast by the Anacostia River, to the north-northeast by Prince Georges County, Maryland, to the north-northwest by Montgomery County, Maryland and to the immediate west by Georgetown and the historic 175-year-old Chesapeake-and-Ohio Canal.

The Debt-Sea Scrolls tell a story of evolving fiscal folly that could represent one of the greatest man-made disasters ever — the destruction of mankind’s most successful experiment in governance and the crippling of an economic system that produced the greatest sustained prosperity the world has ever known.  The first of the Debt-Sea Scrolls was written around 80-years ago when the government believed it could spend its way out of the Great Depression with money it didn’t have…with money it didn’t even almost have.  The programs (known as the “New Deal”) described in the first of the Debt-Sea Scrolls didn’t succeed in revitalizing American industry.  It was The Second World War and the massive Lend-Lease program with which we became the “Arsenal for Democracy” that finally succeeded in revitalizing American Industry. By the time the war was over, so was the Great Depression. Unemployment had plummeted to below 2.0% by the time the war ended in 1945 from 14.6% in 1940, which was essentially the rate of unemployment during the early years of the depression and seven years of New Deal Keynesian prime-the-pump policies.  Following the war, American industry converted from wartime to peacetime production and the rate of unemployment remained below 6.0% for over a decade and for most of the half century that followed.

We learn from the Debt-Sea Scrolls that unsustainable national debt, fueled by easy credit that required borrowers to have very little skin in the game (sound familiar?) was, more than any other factor, generally credited with igniting the economic conflagration we now know as the Great Depression.  Ironically we are now, seventy years later, adding unsustainable debt (to already unsustainable debt) at a level many economists believe will seriously impede our recovery and may end any hope of returning to robust prosperity.  We are, systematically, mortgaging the future of our children, their children and their children’s children as well.

Let us pause to consider the debt-spawning spending spree on which the government has embarked and proposes further to accelerate.

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Tags: deficit spending, entitlement spending, Fannie Mae, federal debt, federal spending
Posted Mar 14th 2010 at 6:01 am in Congress, Economics, Featured Story, News, Politics, federal spending | 88606122 Commentshttp://biggovernment.com/oftheeising/2010/03/14/the-debt-sea-scrolls/The+Debt-Sea+Scrolls2010-03-14+14%3A01%3A36Of+Thee+I+Sing+1776

The Marxist Roots of Obama’s Economic ‘Pivot’

President Obama’s advisers assure us that he will use his State of the Union address tonight to deal with our nation’s ailing economy. Americans have already begun to hear talk of a “hard pivot” at the White House, away from health care and towards jobs.

Yet in economic terms, the president’s shift thus far has been more of the same: more government control and less individual freedom.

His attacks on banks—including a new tax that will invariably be passed on to consumers—caused stocks to plummet last week. He has targeted some banks for being “too big,” but without ending the costly policy of “too big to fail,” which removes the discipline of risk and reward. He crowed, “We want our money back,” but wants to use “our” money for his own spending programs, not for tax relief.

The central idea of the President’s new plan appears to be shaping up as a jobs program, in imitation of FDR’s public employment programs during the Great Depression, and funded by new taxes on Wall Street.

The plan is not about job creation—more jobs could be created by the private sector—nor is it about recouping the bailout. It is primarily about redistribution—and is based on old, bad ideas.
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Tags: Abe Foxman, Anti-Defamation League, bank tax, Barack Obama, economic recession
Posted Jan 27th 2010 at 7:17 am in Congress, News, Obama, Politics | 65738106 Commentshttp://biggovernment.com/jpollak/2010/01/27/the-marxist-roots-of-obamas-economic-pivot/The+Marxist+Roots+of+Obama%27s+Economic+%27Pivot%272010-01-27+15%3A17%3A16Joel+B.+Pollak

This Isn’t Good: 21st Century Looks Like a Replay of 20th

Martin Wolf, columnist for the great Financial Times, has a must-read column this weekend:

The only truly global power was in rapid relative decline. Not long before, it had won a pyrrhic victory in a costly colonial war. New great powers were on the rise. An arms race was under way, as was competition for markets and resources in undeveloped areas of the world. Yet people still believed in the durability of the free trade and free capital flows that had nurtured prosperity and, many believed, had also underpinned peace.

That was how the world looked to many at the end of the “noughties” of the 20th century. Yet catastrophe lay ahead: a world war; a communist revolution; a Great Depression; fascism; and then another world war. The world order – built on competing great powers, imperialism and liberal markets – proved incapable of providing the public goods of peace and prosperity. It took calamity, the cold war and the replacement of the UK by the US as hegemonic power to re-establish stability. That then facilitated decolonisation, unprecedented economic expansion, the collapse of communism and yet another epoch of market-led global integration.

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Tags: 1900s, colonial power, communist revolution, fascism, free capitol flows
Posted Dec 27th 2009 at 10:53 am in History, News | 5257848 Commentshttp://biggovernment.com/publius/2009/12/27/this-isnt-good-21st-century-looks-like-a-replay-of-20th/This+Isn%27t+Good%3A+21st+Century+Looks+Like+a+Replay+of+20th2009-12-27+18%3A53%3A41Publius

Tax Increases Mean Less Revenue: Your Common Sense Guide

As Congress recklessly moves to enact evermore programs in the face of ever larger deficits, it is only a matter of time before they take up the revenue side of deficit equation: Spending – Tax Revenue = the Deficit.  Of course, in response to rising deficits, the Media and the Democrats will reflexively demand tax increases. Republicans, for their part, simply must be able to articulate why higher taxes will actually result in larger deficits not smaller.

I offer this common sense guide for the great battle to come.

At the outset, it must be noted that, in practice, politicians don’t actually raise taxes so much as they pass laws to increase tax “rates,” i.e. income rates, sales tax rates, etc.  They do in an ill-founded pursuit of more tax revenue.

It is ill-founded because tax rate increases, over time, yield less revenue than tax rate cuts.  For instance, when the economy was bad in the early 1990’s, the California legislature raised tax rates and over a 3 year period, revenues actually dropped.  By 1999, Bill Clinton’s tax rate increase resulted in the highest overall tax burden in our history – a recession naturally followed which led to declining revenues.

These common sense points explain why tax rate cuts, over time, will raise for more money than tax rate increases.

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Tags: Bush, Deficit, Great Depression, Hoover, Kennedy
Posted Nov 15th 2009 at 6:17 am in Economics, Featured Story, History, Tax Reform | 2743467 Commentshttp://biggovernment.com/tdelbeccaro/2009/11/15/tax-increases-mean-less-revenue-your-common-sense-guide/Tax+Increases+Mean+Less+Revenue%3A+Your+Common+Sense+Guide2009-11-15+13%3A17%3A59Thomas+Del+Beccaro

Ayn Rand Knew What Caused Our Economic Crisis; Why Don’t We?

Our President blames the Bush Administration. Many on Wall Street are now blaming Obama. Democrats blame Republicans. Republicans blame Democrats.  Who really is at fault for our economic troubles?

The answer is rather simple.

Government and those that proclaim it can solve so many of our problems – regardless of their party.

In 1959, in an interview with Mike Wallace, Ayn Rand posited that:

“A free economy will not break down. All depressions are caused by government interference and the cure that is always offered . . . is more of the same poisons that caused the disasters.”

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Tags: Ayn Rand, FDR, Federal Reserve, Great Depression, Mike Wallace
Posted Nov 6th 2009 at 11:27 am in Economics, History, Politics | 2640658 Commentshttp://biggovernment.com/tdelbeccaro/2009/11/06/ayn-rand-knew-what-caused-our-economic-crisis-why-dont-we/Ayn+Rand+Knew+What+Caused+Our+Economic+Crisis%3B+Why+Don%E2%80%99t+We%3F2009-11-06+18%3A27%3A57Thomas+Del+Beccaro

Thursday Open Thread: Crash and Burn Edition

Today, in 1929, was ‘Black Tuesday.’  This final day of the great stock market crash, with a powerful assist from boneheaded government policy, helped usher in the Great Depression.

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Tags: Black Tuesday, Great Depression, stock market crash
Posted Oct 29th 2009 at 5:15 am in History | 2243431 Commentshttp://biggovernment.com/publius/2009/10/29/thursday-open-thread-crash-edition/Thursday+Open+Thread%3A+Crash+and+Burn+Edition2009-10-29+12%3A15%3A59Publius