It’s a reminder that a focus on a balanced budget with the “grandchildren” in mind doesn’t even pass the “grandchildren” test when it’s remembered how the cost of government programs just grows and grows. A revenue surge “paid” for Medicare 56 years ago, but the burden is very much ours now. Do deficits matter? No. On their own, they’re an obvious signal of investor optimism about a country’s future prospects. Deficits only matter to the extent that all government spending is deficit spending since governments only have money to spend insofar as they legislate to themselves a percentage of actual economic growth. It’s the spending, stupid . Let’s please stop focusing on the logical market consequences of ferocious growth (once again, a growing capacity to borrow), and instead direct all of our energy toward shrinking the economy- sapping tax that is government itself, and that has Pelosi, Schumer, and Biden in control of trillions worth of wealth that they had no role in the creation of.
IT’S THE SPENDING, STUPID The funny thing about deficits is that both sides have trotted out the trite line over the decades about how we’re “burdening our grandchildren” with our borrowing. Both sides once again miss the point... Their misery about borrowing presumes that we’re having a raucous, joyous party now that will be paid for by future generations. That’s just silly... The burden of spending is felt right here and right now. Think about it. Politicized allocation of precious resources limits innovation and limits opportunity born of innovation. Government spending is always, always, always a tax that is paid right away. The burden for our grandchildren isn’t debt as much as they’re inheriting from us a much less evolved society – technologically, culturally, and surely in terms of health care advances capable of turning today’s killers into tomorrow’s afterthoughts. It cannot be stressed enough that total dollars spent by government is the only number that matters, not whether the spending is a consequence of a budget “in balance” or from borrowing. To see why, consider Medicare... Rolled out after a surge of tax revenues that resulted from the economy-boosting Kennedy/Johnson tax cuts, Medicare began as a $3 billion program. The projection in 1965 from House Committee on Ways and Means was that the entitlement would cost taxpayers $12 billion by 1990. The actual cost was $110 billion . It rose to $511 billion in 2014. By 2019 the number had risen to $799 billion, with no end in sight.
John Tamny is a vice president at FreedomWorks, editor of
RealClearMarkets, and author of several books. His next, set for release in March, is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason .
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