Friday, March 8, 2013

If Not Now--When?

I'm going to keep this short, but this has been floating in my head for months and I'm tired of thinking about it.

I sympathize with the tea-party people, at least the original ones who were interested in deficit reduction (the social-conservatives who are trying to take it over can get bent). Namely I'm interested in eliminating the deficit and the debt.

I keep reading and hearing how this is the wrong time to do it; we should follow FDR's New Deal and spend spend spend. So the deficit goes up and the debt goes up. We can repay it later when times are flush.

Really? Well, no. We won't. Except for that short term during the 2nd Clinton administration, there's a deficit every year and there's always some reason to keep the taps open regardless of feast or famine, regardless of which party controls Congress (because it was under W. Bush's united government that started deficit spending again).

What will happen is this: the economy will improve and the government will be flush with tax revenue again. But instead of ending the deficit, they'll just ramp up spending. All those lean years leads to pent-up demand. Every department and group that had a budget cut or a freeze or slow-down is coming to come up and say, "we suffered during the lean times, so now it's time to repay us." They have a point. If not now--when?

But the same will happen for projects, improvements, new construction, research and grants, and pork projects of all types. They'll all want to be funded and this will be the time to do it--while the money is flowing.

So Congress and the deficit deniers say, "we'll grow our way out of it," which is fine except that we never seem to grow faster than we spend. There's always a need to spend more money to encourage growth.

Or another favorite--we'll simply devalue the dollar, but that has all kinds of repercussions; plus you can only do it sustainably in small doses; the governments who do it on a large scale end up bankrupt and with disasterous credit ratings, which drives up borrowing costs, aggravates inflation, and ultimately screws over their own people, who they are allegedly trying to help and protect.

This is the time to cut the deficit.