We, and in particular our government officials, are facing a stark choice in the weeks, months and years to come: either continue investing in a shared American civilization or engage in a ill-thought-out campaign to withdraw our support from such a common society-wide enterprise with a likely catastrophic outcome. Over the border to the North and across the Atlantic, a muted version of this conflict is being played out though with a somewhat less stark choice between civilization and chaos. This is not simply an abstract ethical or spiritual crossroads but one that involves dollars and cents. There is however a connection between the inner moral and cognitive side of this monumental choice and material investments in infrastructure, capital goods. and service provision.
The immediate occasion for this choice are political and cultural conflicts surrounding public and private debt and how we evaluate and handle our current and future debts. There are threats by Republicans in Congressnot to vote for to raise the debt ceiling of the government, with potential for catastrophic effects for the world economy, while drastic cuts in government programs are demanded. Republican leaders in Congress have endorsed “the Ryan Plan” that would gut social programs while extending tax cuts for the rich, all in the name of fiscal austerity. Rep. Ryan’s plan would hardly cut public debt because of its extremely generous tax cuts for the wealthy.
The trend in the last two years is for those on the political Right to make government debt and spending the scapegoat for all that ails the economy and society more generally. This conveniently distracts the public from the most obvious causes of our current economic woes including the role of large political donors to Republicans and Democrats (primarily the financial industry) in bringing down the economy in 2007-2008. The current campaign for fiscal austerity is part of the Right’s longer-standing political program to gut social welfare programs, always citing “government spending” as the phantom that haunts our economy and society more generally. Bond markets, the ultimate “judges” of the solvency of governments, however are showing no diminished appetite for US government debt, even as a crisis in public debt is being declared by these “Very Serious People” among the Republicans, Democrats and in the media.
The real trajectory of public debt and government spending shows that public debt has risen for a host of reasons that are not cited by the critics of spending. US public debt has gone up because of defense spending initiated in large part by Republican Administrations, and in particular the last Bush Administration. The last few months of the Bush and Obama Administrations have increased deficit spending as a means to compensate for the effects of the financial crash of 2008 which was caused by a huge credit and debt bubble in the private sector. Our public spending overall is on an upward trajectory because of the incredibly expensive profit-driven medical system that has been built in the United States, as well as increases in medical spending overall due to technological innovation and an aging population. Making public debt the scapegoat at this moment in time is a deeply irresponsible political move that distracts from a whole host of real factors that both require spending now and also inflate spending now and most importantly in the future.
Deficit spending, and the concomitant public debt it incurs in bond obligations, is a critical tool of the US government, used by almost every Presidential Administration in recent memory, to respond to some perceived or real social or economic need, often when other financial means, such as sufficient tax revenue or private sector initiative or capability, are lacking. The mania for tax cuts on the Right since the Reagan administration, has forced the federal government to use more deficit spending and to incur more debt, as the government attempts to address both perceived and real needs that no other agency will address. It then seems to be a very profound irony then that the proponents of fiscal austerity are often exactly those that advocate lowering taxes and government revenue!
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