Tag Archives: government debt

Harsh truths about the Federal debt, showing how Left & Right lie to us

Summary: Each presidential campaign season the federal debt becomes an issue, with the debate consisting largely of bogus soundbites. Each election sees that the federal debt has not only grown, but has grown faster than the US economy — with little to show for it (e.g., our public infrastructure rots). This will not end well for us.

The big picture: the ratio of federal debt to GDP

Gross Federal Debt to GDP

First insight: massive debts can be paid down with steady growth and moderate inflation (especially easy with long-maturity fixed rate debt), proving that conservatives forecast of certain debt doom are false. Second insight: this trend will cause problems if not stopped (left-wing economists will deny this until the crisis begins).

Focus on events since 1980.
See how the government’s debt to GDP ratio rose under Reagan & Obama.
See America’s steady bipartisan leadership!

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Minting a trillion dollar platinum coin: the easy fake solution, so we can avoid fixing our problems

Summary:  The current crisis is one of governance: how our leaders work together combine with structural flaws to produce bad outcomes. Today we look at this from a legal perspective, which describes both the problem and an easy solution. Such situations show a society its problems, and provide the pressure for successful societies to fix them. Our unwillingness to confront our structural problems and interest in quick fixes suggests we are not one of those. This is part five of a series.

Trillion Dollar Platinum coin

Trillion Dollar Platinum coin

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Contents

  1. The problem is a trilemma
  2. The Trillion Dollar Platinum Coin
  3. Legal and Operational Difficulties
  4. For More Information

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(1)  The problem is a trilemma

The structure of every government accumulates becomes weaker over time as its people discover and exploit flaws in its design. Successful regimes fix, even improve, themselves. As America has done with Amendments during the past two centuries. A regime “ages” or ossifies in the sense that it loses this vitality, as its people venerate the Founders and lose the willingness for the always difficult task of reform. That might be happening now to America.

Our “rotten boroughs” in the Senate, increased use of filibusters to block normal legislation and holds to block appointments — these and other things (see here for details) are the political equivalent of arteriosclerosis. Instead of working to fix them, we either live with them or seek quick fixes (often dysfunctional fixes). Today we examine one such problem, and a proposed fix. First, the problem …

(a) The Constitution“, Neil H. Buchanan (Prof Law, George Washington U), New York Times, 15 January 2013 — Excerpt:

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About the crisis: The GOP is right. So is Obama. That’s why it’s a crisis.

Summary:  We can learn lost lessons about our government from the debt crisis. Much of what’s said in the media is wrong, chaff thrown to confuse us. Here are some simple facts about the crisis. Both sides are right. If they cannot agree, there is a simple but perilous solution. It has worked before and will work again — but must not be overused. This is the third in a four part series.
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Traitor

Let’s not overreact

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Contents

  1. Introduction: our problem
  2. The Republicans are correct
  3. The President’s Options
  4. The 14th Amendment
  5. Other posts in this series
  6. For More Information

(1)  Introduction: our problem

The Republicans in Congress are using their leverage to change ObamaCare, entitlement spending, and tax policy. They are holding government spending hostage, and threatening to force the government to default on its debt.  The slowdown (not a shutdown) is depressing the economy and harming a large number of Americans.  Unless Congress acts, sometime after October 17 the Federal government will default on its bonds.

(2)  The Republicans are correct

Many of us have forgotten the basics of our system.

  • Congress and Presidents have equal legitimacy as elected representatives of the people.
  • Control of spending is among the greatest powers of the legislature, and has been a powerful tool to shift power from Kings to the people.
  • Therefore the House has both history and law on their side in this battle with President Obama.

Democrats argue that Washington’s rules of polite conduct trump law and logic, as if conflicts about high public policy should be run like Sunday afternoon monopoly games — where consulting the actual rules is a no-no.

For details see this excerpt from “Government shutdowns are the worst kind of budgetary reversion, except for all the rest“, Gary Cox (Professor of Political Science, Stanford), blog of the Washington Post, 3 October 2013:

Who came up with the idea that budgets should be delayed as a means to force the executive to adopt policies it doesn’t want to?

The idea goes back to England’s Glorious Revolution, where MPs fought hard to put the Crown on a short financial leash, so that they could control Crown officials’ actions. Although they did not use the term, English arguments about what would give Parliament bargaining leverage vis-à-vis the Crown hinged on the budgetary reversion.  Because expenditure authority would lapse every year, forcing portions of the government to “shut down” in contemporary American parlance, parliamentarians were assured the Crown would seek a new budget every year — whereupon they could bargain for attainment of their various goals.

As James Madison put it, “This power over the purse may…be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.”

… when given the power a shutdown reversion confers, the “immediate representatives of the people” have, in country after country, done precisely the sort of thing that the House Republicans are now doing. They have sought to force the executive to adopt “just and salutary” measures, using the threat of a government shutdown. Examples include the Australian episode noted by Max Fisher, Chile before and after its civil war of 1891, and various European countries that subsequently sought to create what was dubbed parliamentarisme rationalisé in the interwar period.

… There are two and only two institutional reforms that can reliably avoid the bargaining failures that lead to shutdowns. … {see the article for more}

(3) The President’s options

President Obama’s actions to protect the United States in response to Congress must conform to the following three laws:

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