Japan is in the news. Its fiscal situation is less of a problem than ours, because its households’ gross financial assets exceed their national debt. Why should we be in such a shape? It could be our spendthrift ways, egged on by incessant advertising. Or perhaps it’s America’s now chronically low wages. The bottom 20% of US workers now earns less than $27,000 per year. Try feeding a family on that.
Prominent economist Mark Zandi says the GOP’s anti-public spending intentions will COST the USA 700,000 jobs. So much for “jobs, jobs, jobs.” It’s a lot like “drill, drill, drill” while watching the Gulf Coast become coated with tar balls. Spending more has precisely the same effect as cutting taxes. The result is no different. So who got us here? If the party in control of the US House wants to do both, where is that taking us? The more the government delays tax hikes, the more its debt burdens are going to swell. It’s that simple. Most of the current federal deficit is being financed without increases in the publicly traded portion. That’s important. If you add up new Treasury issuance, subtract shrinkage in Fannie and Freddie debt and purchases by the Fed (when it buys Treasuries we owe more of the debt to ourselves, not foreigners), the result is that direct US borrowing in the markets is at a standstill.
US tax revenues are at their lowest level since Truman was President. The increase in our national debt was due not to fiscal spending to stimulate the economy. Rather, it was more due to an abrupt slowdown in economic growth. Where did all the growth go? Has anyone looked in the pockets of the bankers, hedge-fund managers, and mortgage brokers? Some commentators like to say that when people invest in domestic issues they are buying into American productivity. That may be the result, but the intent is to buy into American production, or what there is left of it.
Those who talk of cutting spending often really mean shifting spending. Look at Wisconsin. And to think there are conservative commentators who speak of provision of public services as “excesses.” See “pockets,” above. Again.
If rhetoric matched interest rates it would surely become very quiet around the country. That might save quite a few hearing-aid batteries.