2/15/2018 - Judge Andrew Napolitano Townhall.com
Imagine you open the
faucet of your kitchen sink expecting water and instead out comes cash. Now
imagine that it comes out at the rate of $1 million a minute. You call your
plumber, who thinks you're crazy. To get you off the phone, he opines that it
is your sink and therefore must be your money. So you spend it wildly. Then you
realize that the money wasn't yours and you owe it back.
Now imagine that this
happens every minute of every day for the next three years. At the end of the
three years, you owe back more than $6 trillion. So you borrow $6 trillion to
pay back the $6 trillion you owe.
Is this unending spigot
of cash reality or fantasy?
I am not speaking of
Amazon or Google or Exxon Mobil or Apple. They deliver products that appeal to
consumers and investors. They deal in copious amounts of money because they
sell what hundreds of millions of people want to purchase and they do it so
efficiently that hundreds of thousands want to invest in them. If they fail to
persuade consumers to purchase their products and investors to purchase their
financial instruments, they will go out of business.
My analogy about all
that cash in your kitchen sink that just keeps coming is not about voluntary
commercial transactions, which you are free to accept or reject. It is about
the government's spending what it doesn't have, the consequences of which you are
not free to reject.
Government produces no
products that consumers are willing to pay for voluntarily, and it doesn't sell
shares of stock in its assets. It doesn't generate wealth; it seizes it. And
when it can no longer politically get away with seizing, it borrows. It borrows
a great deal of money -- money that it rolls over, by borrowing trillions to
pay back trillions to prior lenders, and thus its debt never goes away.
Last week, after eight
years of publicly complaining that then-President Barack Obama was borrowing
more than $1 trillion a year to fund the government -- borrowing that the
Republicans silently consented to -- congressional Republicans, now in control
of Congress and with a friend in the Oval Office, voted to spend and hence
borrow between $5 trillion and $6 trillion more than tax revenue will produce
in the next three years; that's a few trillion more than they complained about
in the Obama years.
That's borrowing $1
million a minute.
Obviously, no business
or household or bank can survive very long by borrowing from Peter to pay Paul.
Yet the federal government, no matter which party controls Congress or the
presidency, engages in staggering borrowing -- borrowing that will cripple
future generations by forcing them to pay for goods and services that were
consumed before they were born.
The government has
often borrowed to meet critical emergency needs, typically during wartime.
Indeed, the country was born in debt when Alexander Hamilton, the father of big
government, offered the idea that the new federal government created by the
Constitution could purchase the fidelity of the states by assuming their
Revolutionary War debts.
But those debts were
paid back using inflation, gold and tax dollars, and the country enjoyed
sporadic periods of nearly debt-free government. Then three unhappy events
coincided about 100 years ago: Woodrow Wilson -- the father of modern-day big
government -- was elected president, and he brought us into the useless battle
over national borders among old European royalty called the Great War, and he
financed American participation in that first world war using the new printing
presses owned by the new Federal Reserve System.
The $30 billion
President Wilson borrowed from the Federal Reserve and others has been rolled
over and over and has never been repaid. The federal government still owes the
$30 billion principal, and for that it has paid more than $15 billion in
interest. Who in his right mind would pay 50 percent interest on a 100-year-old
debt? Only the government.
Wilson's $30 billion
debt 100 years ago has ballooned to $20.6 trillion today. At the end of
President Donald Trump's present term -- because of the Republican budget
signed into law last week -- the government's debt will be about $27 trillion.
That amount is a debt
bomb waiting to explode. Here's why. Every year, the federal government
collects about $2.5 trillion in revenue and spends it all. It borrows another
$1.5 trillion to $2 trillion and spends it all. To avoid paying back any of the
$27 trillion it will owe, the federal government will need to spend about $1
trillion a year in interest payments.
That $1 trillion is 40
percent of the revenue collected by the federal government; that's 40 cents on
every dollar in tax revenue going to interest on old debts -- interest payments
that are legally unavoidable by taxpayers and voters.
Will the taxpaying
public tolerate this much longer? What would happen if taxpayers stopped paying
taxes because 40 percent of what they've been paying has produced nothing for
them? Would investors stop lending money to the government because of fear that
the government could not pay them back? The Constitution requires the
government to pay its debts. Would the government's creditors acquire control
of the government's fiscal policy in order to pay themselves back? The
government's biggest creditor is one of its biggest menaces -- the government
of China.
Borrowing money at $1
million a minute is digging a hole out of which we will never peacefully climb.
President Obama's and President Trump's own military and intelligence chiefs
have argued that the national debt -- not the Russians or the Islamic State
group or the North Koreans -- is the greatest threat to freedom and security
that we face today.
Why are Congress and
President Trump not listening?
No comments:
Post a Comment