Deficits Do Matter
If the federal government were to buy up 50 billion dollars of cheese, you might think that the government was trying to subsidize dairy farmers. If the federal government were to buy up 50 billion dollars of arugula, you might think that the government was trying to subsidize arugula farmers. If the federal government were to buy up 50 billion dollars of solar cells, you might think that the government was trying to subsidize solar cell manufacturers. If the federal government were to buy up 50 billion dollars of capital you might think that the government was trying to subsidize capitalists…
And by “capitalists” we don’t mean entrepreneurs or even CEOs of existing businesses. We are talking about those who have money to invest, the Already Rich.
And lately we aren’t looking at a mere $50 billion dollars per year subsidy. We’re talking over a trillion dollars per year – and that’s before the federal government dropped all pretense of fiscal sanity due to the Covid 19 pandemic. When the government runs a deficit, the government is purchasing the services of those who have money to lend.
A one trillion dollar federal budget deficit is a one trillion dollars per year price support program for the Already Rich.
Contemplate this for a bit. Then turn on the news. Notice the socialists in the streets. They are rioting for a reason. The Evil Marxists are milking the discontent for all its worth, but they didn’t create this discontent. Republicans did that.
And many mainstream Republicans say this subsidy for the Already Rich is not enough. We need to cut taxes on unearned income so there is enough capital to finance the economy, they say. Capital gains taxes should be eliminated. Only those who work for a living should be taxed.
With “conservatives” like this, who needs socialists?
It’s a wonder that the Republican Party can win as many elections as it does. If the Democrats weren’t so terrible, the Republican Party in the US as a whole would be Endangered, as it already is in California.
The Republican Party can win elections in a democratic republic for a hidden reason: the Already Rich is a pretty big group. They are called retirees (with adequate retirement savings). They also include those nearing retirement age (who have saved sufficiently). The Republican Party is the Retiree Party.
OK Boomers, listen up: if conservatism is to have a future, it needs to pay attention to the younger generations. Do you seriously think that those communists rioting in the streets are going to automagically become conservative when they get older? How about those college students Feeling the Bern?
If conservatism is to have a future, conservatives need to actually care about the future. That means passing along a pleasant planet to the next generation. That means passing along a US Treasury that isn’t bankrupt.
If conservatives want the welfare caste to get a job, then we need to make getting a job pay something. No more trillion dollar subsidies of Capital at the expense of Labor.
If Family Values conservatives want young people to settle down and marry instead of fornicating for a decade first, they need to create an economy where you don’t need a decade or more of seniority before you can afford to start a family.
If conservatives want to Keep America Great, we need to stop eating our seed corn and calling it Growth.
If we want to make Main St. good again, we need wean our zombie banking system from government bonds, and make more capital available to millions of small businesses.
Deficits Demand Growth
So what does this have to do with Sustainable Economics? With the environment?
Answer: deficit spending is a commitment to either higher taxes in the future or future economic growth. Given how many Republicans have taken the Grover Norquist Pledge, the commitment is towards more growth.
That is, more work. More moving those dollars around in the Circular Flow. It’s grow or go bankrupt. The federal government is committing future generations to continue a frantic life of two or more jobs per family. Either that, or crank up the population to reduce the per capita burden of our colossal debt.