Balance The Budget

Post Date 2012-10-23 | Author administrator |

Our country’s politicians on both sides of the aisle continue to debate how we get out of this recession. The very fact that this is what they are debating shows that they either do not recognize or do not want to deal with reality.

 

It may surprise Americans to know that America is not in a cyclical recession at all. Cyclical recessions are caused by temporary conditions like excessive inventories, or perhaps a technology induced increase in productivity that temporarily displaces a portion of the workforce, or a loss of economic activity caused by a loss of exports to a competitor country.

The end of a cyclical recession occurs when the inventories get back to normal levels, or technology displaced manufacturing jobs are replaced by new job opportunities perhaps in other industries.

Unlike what the U.S. government is doing, you can’t permanently end a recession by increasing debt. You can delay there being a recession but you can’t end it. The government can print and borrow money and give that money to millions in many forms – food stamps, free tuition, low cost loans, subsidized housing, etc., but these are only temporary as sooner or later the government runs out of money.

Our country is not in a recession but it has one coming. What we are currently in is a fundamental transition from an economy supported by private industry which has been based on years of individual hard work, productivity and creativity to an economy supported by government. It is a system that has failed throughout the world and throughout history. It is failing in the U.S. now and will continue to fail.

The debate in this country needs to be about how do we save our country, not about ending a recession. There are several things that are critical to even having a chance to save the United States. We first have to quit proclaiming ourselves to be the greatest country ever in the world. We have to face the new reality that we are no longer the super power of the world. If we keep making these proclamations of our greatness, we will be no different than boxers who proclaim what a terrible whipping they will put on their upcoming opponent only to get knocked cold. In other words, we have to accept that we are done if we don’t learn that success depends on individual creativity and hard work and not on political rhetoric and “government enterprise.”

We live in a country today where politicians don’t even comment on “retiring our debt.” They only talk about reducing our annual deficit. Some even talk about reducing the rate at which the deficit is increasing. This is like being in a leaking boat out in the middle of an ocean and being content to discuss slowing the leak even when you know the boat is going to sink anyway and there is no one that is going to save you. You have to stop the leak and bail out the boat if you intend to survive.

Worse, if our country were spending billions on capital expenditures like shipping ports, or bullet trains, or new interstate highways, or bridges, or a new electric grid, it would make some sense. But we’re not. Unlike China, which is doing exactly those things, we are giving billions to other countries, wasting billions on green energy and throwing billions or more away trying to hide the reality of our faltering economy. We are even giving everyone that can’t afford it a cell phone. Little good it will do them to have a cell phone because the 911 call they place to the police department or ambulance service in the future won’t get answered. Why? The city will be bankrupt.

As scary as it is, our country will fail absent an acceptance that it will fail. Historians can name many empires that failed. Many of these countries proclaimed themselves the greatest country on earth; the Roman Empire being one of the most notables and the Soviet Union being one of the most recent.

Clearly, the federal budget must be balanced now. We cannot wait for another day, another year, another election or another generation. Balancing a budget is not greatly difficult. The difficult part is dealing with the impact of balancing it. But the hardships on Americans caused by a balanced budget will pale in comparison to the hardship of a bankrupt America.

 

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