Somebody has to tell the Republican Washington leadership that the federal deficit is essentially irrelevant and balancing it could easily be as counterproductive now as when Hoover tried to do it back in 1930 and 1932.
Bond sales cover the overspending, but that is correct and normal. A lot of what government does is consumed over many years, warships and buildings come quickly to mind, and should be paid for that way just like someone’s mortgage. The economy needs high-quality debt for everything from retirement income to short-term financial instruments. The trouble comes from what the feds do to service the debt build up: inflation and higher taxes are their two most common reactions.
The deficit is really only a problem for Washington when it limits Congress’ ability to spend. In that sense, even John Boehner turns out to be far too government-centric. There can be no question of the fact that federal spending beyond the Constitutional basics distorts the economy, but too many politicians don’t see it that ways, because they have nothing else to sell.
House Republicans have to learn and proclaim the basics of money and taxes because balancing the budget could be a disaster for the economy as even more money is pulled out of the productive economy to pay for their past sins. The best example of how to get out of debt remains what England did after Waterloo and the massive debt of the Napoleonic War. Parliament dumped the income tax immediately, returned to sound money in 1821 and went to free trade later. The economy exploded and led to a century of prosperity like none seen before. They didn’t pay off their wartime debts, a huge sum for the time, they froze it and paid interest. As time went by, that once inconceivable mountain of debt shrank to insignificance in the shadow of the world’s most powerful economy.
Our Republican leadership should be campaigning on a large tax cut -- significantly lower income-tax rates on people and their employers-- to restore the economy’s growth. Real growth solves so many problems that it is hard to believe the party of business on Main Street USA could miss it. The Republican majority in the House of Representatives could massively reduce spending overnight by turning welfare programs back to the states and the private sector where they used to be. This is never as easy as cutting military spending, but that has already taken too much of the needed spending reduction.
Maybe sound economics and faith in American enterprise can’t make it through the U.S. Senate and might be vetoed by President Obama; but the Grand Old Party, which the voters elected to guard the nation’s purse in 2010, owes its longsuffering supporters the effort to put that choice to the senate and president.
Henry W. Meers, Jr. is a resident of Frankfort, Illinois and a 2010 GOP candidate for Congress in the then-11th CD.