On Monday, the folks on Pennsylvania Ave that run US America announced the budget deficit for 2009 will exceed $482 billion.  If you include war costs it passes the $500 billion mark.  Both would be records.  I’m sure George Bush has a bucket list that includes setting some type of record.  Worse though, is that neither of the presumptive candidates seem to care.

But first, what is the budget deficit?  Well if you spend $100, $85 of it your own and $15 you borrowed, you’re running a $15 deficit.  The government has been running a deficit since George II started measuring for curtains at the White House.  There are arguments both for and against deficit spending, but we aren’t here today for that debate.  What’s bothering me is no one seems to care how much this hurts us.

Congress recently passed a bill that makes it legal to increase our national debt to $10.6 trillion from $9.8.  Its mostly a symbolic gesture since they’ve already begun spending the money to increase that debt (economic stimulus was one of them).

Worse, is that the two guys that are vying for the top job in the US don’t care.  They make great statements about cutting spending, but that doesn’t include their healthcare proposals and neither have a solution for social security.  The federal government owes money to the Social Security Administration.

Projections as far out as 2013 indicate we’ll run at a surplus again.  We projected less of a deficit for 2009 originally but the economy has a way of giving the finger to estimates.  Even if we do run a surplus do you think we’d actually try and pay down this debt?  Yeah right, does a crack-head buy less crack because her last “client” included a $10 tip?  We’ll just create more BS programs.

The government is an entity just like a business or a person.  We can all run up a certain amount of debt before we go bankrupt.  If I make $100k a year I can probably run up $1 million in “good” debt before I’m in big trouble.  That’s 10x my earnings.  The government will make around $2.5 trillion this year; now I’m no economist but at 10x earnings on “good” debt we can have a national debt of $25 trillion before we’re bankrupt.  This is pure speculation, we might go under at $10 trillion or maybe $100 trillion.  My point is we shouldn’t have a debt at all.

The government is an entity for the people by the people.  They aren’t our parents and are not supposed to support us.  But the weak have come to rely on the government like a breast feeding infant.  As far back as the 1800s government officials learned they could stimulate the economy by increasing their spending.  Unacceptable, it is not the government’s job to prop up the economy.  Short term economic fluctuations like a failure of Freddie Mac should not be interrupted by the government.  The conclusion is a bit political, but I’ve included what The Weakonomist thinks the federal government should and should not do.

Should:
Raise an army to protect the borders from invaders
Regulate industry to keep the field fair for all
Pass laws making certain acts illegal
Keep a budget small, limited, and balanced with no debt

Should not:
Prop up the economy in any way, shape, or form
Bail out companies or industries deemed to fail by the free market
Use the military to spread democracy or eliminate “potential” threats
Allow someone like Ted Stevens to speak publicly

Read Deficit Story

By The Weakonomist

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categories: economics, government