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Debt and the Democrats

Global Finance Mag

"If a man had twenty pounds a-year for his income, and spent nineteen pounds nineteen shillings and sixpence, he would be happy, but that if he spent twenty pounds one he would be miserable." –
Mr. Micawber in Charles Dickens’ David Copperfield.

At some point, hopefully before Connecticut and the nation are driven to the poor house, woke Democrats will discover the causal connection between getting and spending: The more you get in taxation, the more you spend; the more you spend, without trimming expenses, the greater the necessity of 1) raising taxes, 2) borrowing money, or 3) printing money, the chief producer of inflation and, inflation’s uglier twin sister, recession.

Remaining out of debt was, scholars believe, the primary motivator in Dickens’ life, even when he was well on his way to achieving literary celebrity status. Dickens well understood the connection between getting and spending and felt the debtors lash on his shoulders for much of his life. His own father was tossed into a debtor’s prison.

Britain abolished debtor’s prisons in 1869, perhaps understanding that no one can squeeze assets from an imprisoned debtor.

A speech given by President Joe Biden in Springfield, Virginia – “his latest attempt to reframe the economic narrative away from the rapid price increases that dogged much of his first two years in office,” the New York Times tells us – graphically illustrates that the president has not yet perceived the connection between getting and spending.

If 2023 were pre-1868 Britain and Biden the debtor or his predecessors had been hauled into court for having amassed excessive debt, Biden most certainly would be berthed in debtor’s prison for the remainder of his dwindling years. Biden, possibly suffering from dementia, is 80 years young, and some important Democrats who can add and subtract hope he will ditch his presidential ambitions before the upcoming elections on November 5, 2024 roll around.

There are, most economic scholars will acknowledge, a limited number of options to reduce debt: 1) raise taxes, 2) cut spending, 3) borrow or print money at the risk of increasing inflation and a possible recession, 4) pass on the debt to yet unborn generations who are unable to register their dissatisfaction at the polling booth with those who have saddled them with debts they did not create.

Most recently, Biden and the Democrats, who control both the presidency and the U.S. Senate, have refused to compromise with Republicans on the matter of the U.S. Debt Limit. Even Saint Barack Obama reached a deal with Republicans of his day to split the pain involved in raising the limit: For every dollar spent in the Obama budget after the limit had been raised a dollar would be cut in spending.

The “debt limit,” this writer noted in a recent Newsletter, “has been delimited by presidents and the U.S. Congress no fewer than 78 times since 1960 - 49 times under Republican presidents and 29 times under Democratic presidents.

“Initially, the debt ceiling was ‘a fix that enabled bonds to be issued without requiring repeated congressional approvals,’ according to the Associated Press.  The debt ceiling, in other words, is a ‘workaround’ that relieves the U.S. Congress of its constitutional oversight obligation to control every dollar spent by the executive department.”

Without such compromises, the debt limit is abolished. Once the workaround has been for all practical purposes repealed, we are left with the status quo ante prior to the establishment of the debt limit.

In a government of grownups, compromise – and, more importantly, the recognition of economic realities – is a precondition of liberty. If spending is not at some point brought in line with taxation, we arrive together at the economic gibbet. You can only discharge debt for so long using the tools in Biden’s economic tool kit – which are two: printing money that reduces the purchasing power of the dollar, or sending the debt of incontinent spending to children yet unborn who, hopefully, will have the courage to settle the debt problem that bedeviled fictional characters and real relatives.

The realities of the free and unfree, highly regulated, market are exactly the same: "If a man had twenty pounds a-year for his income, and spent nineteen pounds nineteen shillings and sixpence, he would be happy, but that if he spent twenty pounds one he would be miserable."

Like God, reality will not be mocked, whatever the economic geniuses of the left may say. If spending is not reduced, taxes must rise to meet spending, and the notion that the rise in spending will be met by squeezing millionaires, armed here in the United States by tax accountants and obliging politicians dependent upon them for campaign donations, is a political fable whose real consequences may be appreciated, by those who have eyes that see and ears that hear, everywhere in the world where post Marxian socialism has been tried and found wanting.

Millionaires can well afford the expense of workarounds; all other must pay taxes.


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