The Federal Debt: Too Much Spending or Too Little Revenue?...
This is the title of a recent Fed publication. (You can click here to read the article; it's only a couple of pages long.) I'll save you the drama: the answer is too much spending.
Why this study was necessary seems strange. Is there anyone out there who doesn't understand what's been going on? The government has been spending more and more. Revenue has not kept up with their spending, so every year they spend more than they take in. The government adds to its debt every year following this irresponsible course.
The debt ceiling debate going on now reflects this reality. The debt ceiling will certainly be raised. But I doubt that the reality will change much - if at all - however the political compromise plays out between Republicans and Democrats. Isn't that incredible? The game will go on. The government will keep spending more than it takes is; the federal debt will keep rising.
So what happens then? For years, people have pointed out the federal government's irresponsible activities. There's nothing new going on now, except that more people are aware of this. I suppose there is more awareness because of the 2008 market debacle, the severity of the recession, high unemployment with no relief in sight, and people looking around seeking explanations and solutions.
So will this increased awareness result in a more responsible government? Well, let's give this the benefit of the doubt and simply say, "Let's wait and see."
But even with that positive spin, (After all, who can consistently look this bad news in the eye day after day, and keep on talking about it?) anyone with half a brain will be thinking that not much will change. The can will be kicked down the road yet again, just like they're doing in Europe. It will only be when a crisis arises that any kind of substantial action will be taken. And even then, just how substantial will that action be. Will the problem of government spending more than they take in be resolved? Will the situation reverse itself?
One way to answer this is to simply say that in a "democratic" society - one where people can vote goodies for themselves - the situation can never really reverse itself.
So it's going to more of the same, or some calamity that will do one of two things: 1) change our form of government from its current democratic state; 2) result in a reversal of the current situation to one where the government spends less than it takes in.
As for #1, don't count out a change in government away from its democratic slant. The bad news would be if some calamity brings us to a dictatorship of some sort - one where a "white knight" appears promising to solve all our problems if only we'll vote him (or her) in and just trust them. The good news would be be a return to the original "republican" form of government set up by our Founding Fathers, a government where majority rule was mistrusted and where democracy was seen as a form of mob rule.
How would #2 come about? The easy path would be a strong economy brings greater revenue. Right now, there's no prospect for a stronger economy - at least one strong enough to significantly increase revenue enough to result in the government spending less than it takes in. But even if the economy does someday strengthen that much, do you think that the government would restrain its spending, or increase its spending to keep up - probably even keep ahead - of additional revenue?
Since I think the government would just increase its spending of any additional revenue, the thing to watch closely is #1 - some sort of change in government.
Of course, there's always the issue of when some sort of calamity might occur. And here, you've got to admit that governments - here and in Europe - are really good a kicking the can down the road (to the detriment of our children). So you've got to be prepared for things dragging on like this for a while.
Why this study was necessary seems strange. Is there anyone out there who doesn't understand what's been going on? The government has been spending more and more. Revenue has not kept up with their spending, so every year they spend more than they take in. The government adds to its debt every year following this irresponsible course.
The debt ceiling debate going on now reflects this reality. The debt ceiling will certainly be raised. But I doubt that the reality will change much - if at all - however the political compromise plays out between Republicans and Democrats. Isn't that incredible? The game will go on. The government will keep spending more than it takes is; the federal debt will keep rising.
So what happens then? For years, people have pointed out the federal government's irresponsible activities. There's nothing new going on now, except that more people are aware of this. I suppose there is more awareness because of the 2008 market debacle, the severity of the recession, high unemployment with no relief in sight, and people looking around seeking explanations and solutions.
So will this increased awareness result in a more responsible government? Well, let's give this the benefit of the doubt and simply say, "Let's wait and see."
But even with that positive spin, (After all, who can consistently look this bad news in the eye day after day, and keep on talking about it?) anyone with half a brain will be thinking that not much will change. The can will be kicked down the road yet again, just like they're doing in Europe. It will only be when a crisis arises that any kind of substantial action will be taken. And even then, just how substantial will that action be. Will the problem of government spending more than they take in be resolved? Will the situation reverse itself?
One way to answer this is to simply say that in a "democratic" society - one where people can vote goodies for themselves - the situation can never really reverse itself.
So it's going to more of the same, or some calamity that will do one of two things: 1) change our form of government from its current democratic state; 2) result in a reversal of the current situation to one where the government spends less than it takes in.
As for #1, don't count out a change in government away from its democratic slant. The bad news would be if some calamity brings us to a dictatorship of some sort - one where a "white knight" appears promising to solve all our problems if only we'll vote him (or her) in and just trust them. The good news would be be a return to the original "republican" form of government set up by our Founding Fathers, a government where majority rule was mistrusted and where democracy was seen as a form of mob rule.
How would #2 come about? The easy path would be a strong economy brings greater revenue. Right now, there's no prospect for a stronger economy - at least one strong enough to significantly increase revenue enough to result in the government spending less than it takes in. But even if the economy does someday strengthen that much, do you think that the government would restrain its spending, or increase its spending to keep up - probably even keep ahead - of additional revenue?
Since I think the government would just increase its spending of any additional revenue, the thing to watch closely is #1 - some sort of change in government.
Of course, there's always the issue of when some sort of calamity might occur. And here, you've got to admit that governments - here and in Europe - are really good a kicking the can down the road (to the detriment of our children). So you've got to be prepared for things dragging on like this for a while.
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