Deficit Spending Cause for Alarm?

The current rhetoric about "the deficit" belies a complete and utter disregard for history and economics. As far back as the Revolutionary War in our country, there has been deficit spending. Granted, the amounts were tiny by comparison to today's trillions, but the economy was like drops in a bucket compared to today's virtual torrent of capital. When George Washington needed horses, or food for his men, he had the power of the pen to agree to "pay tomorrow" for things that were used today. This is the essence of buying on time, or deficit spending. When the Oneida tribe brought food to his starving troops at Valley Forge, Washington not only couldn't pay them for it, but there was a very real chance that his men would prevail. Our government is still making payments to the tribe for their tide turning act of compassion. Luckily, we are all familiar with these sorts of transactions. Buying on credit only means two things, first, that whatever it is that you need cannot wait and must be purchased right away, and second that whoever is willing to foot the bill trusts you to pay them back.

The government has stretched this basic financial transaction quite thin, but even with the ballooning debt, it still equals less than a year of commerce for our country. When I purchased my home, it was in the neighborhood of five years of income for both my wife and I. No one would have said that it was "saddling our children with debt." In fact, rather than people being loathe to see me spend more than I had, they were excited for me. They were willing to see the benefits that could be gleaned from having my own place rather than the fact that the bank would eventually receive nearly ten years of my income, for the luxury of moving into a place that would have cost five years of income if I could have afforded it right then.

When we consider deficit spending, there are scary possibilities for both the individual and our country, but the scenarios that lead to catastrophe for individuals are many more and far more likely than those that lead to collapse for entire nations. For instance, the government is unlikely to lose it's job. In spite of the "Tea Party" refrain that government is too big, few of the corporate farmers in our country want their subsidies to dry up. Highways need to be maintained and schools need to be funded. These same rabble rousers who claim that government is out of control would scream bloody murder if we cut the military budget in half to balance the budget. The claim that out of control spending is bankrupting our country is completely overblown.

What is needed now, and this goes beyond most American's ability to conceive, is an act of compassion and humanity similar to what the Oneidas did over two centuries ago for our troops at Valley Forge. In this difficult time, when the pockets of most citizens of our great nation have been so thoroughly picked by the large corporate players, the richest among us need to give back. We currently live in a culture that has difficulty understanding the give-away. It has gone by many names in tribal cultures around the globe, but this practice is physically and spiritually necessary to stay in touch with who we are as humans. Unlike donations to non-profit groups, which in today's culture allow businesses to write off some of their obscene profits, the give-away requires that one give something of true value. Money, to those making millions, or in some cases billions, has a lesser value to them than it has for those making hundreds or even thousands.

The give-away needs to be substantial and it needs to make a qualitative difference in the lives of both the recipient and then it follows that the giver is transformed as well. I heard a terrible statistic yesterday. The "conservatives" are out spending "liberals" by a factor of five to one in this election cycle. More money is being spent on this mid-term election than any previous one. The numbers are staggering. This amounts to the opposite of a give-away. The wealthiest among us are not only hanging onto their fortunes but spending vast sums to consolidate their power and position. Whereas the give-away is characterized by humility and generosity, these capitalists are only spending so that they might get something in return.

I'm sorry if you read it here before, but I cannot stress enough the fact that the non-financial S&P 500 companies, have enough cash on hand and short term debt owed them that they could fund a second "bail out". Instead, they are consciously choosing to hold that cash, crippling the economy in the hopes of swooping in, and making a killing, when prices and the cost of labor drop further. Not only are these powerful corporate interests unwilling to give away any of their wealth and position, but they are willing to create pain and misery amongst all of us for their benefit. It is sad, because many of the individuals who make up the boards of directors and many of the stockholders in these companies know that giving actually enriches the giver as well as the receiver. I wonder if any of them will have the nerve to speak truth to power.

Being knowledgeable in this day and age requires more than just knowing words. Knowing the underlying meaning and implications inherent in them is required. It seems that knowing who paid to hold the focus groups that led to deciding what to say is just as important as knowing the meaning of the words. Quite often the platitudes are so devoid of meaning and sense that one questions, "Are they words at all? Or, just a nonsense song made up to fill in the gap created by ignorance." The majority of U.S. citizens voted for change two years ago, we beat the odds and started a revolution in political thought and expression. Let us not acquiesce in the face of those who would return to ways of the past. Conservatism brought us to the brink of destruction. Unbridled greed and inequitable distribution of wealth have been proven to not work, but the rhetoric blithely sidesteps that issue.

I have heard estimates that the bailout and stimulus cost us over ten thousand dollars per family. Oddly enough, this seems like a lot of money to the legions of poorly educated folks jumping on the bandwagon and saying that government is the problem. What is most interesting is that on closer inspection, the "bailout" is going to actually make some money, because the money was loaned at interest and the rate was higher than the rate of inflation. That money is nearly all paid back already. The unequal distribution of pain from the current economic collapse shows across America and the world. If government is part of the problem, it is because of too little regulation and oversight, not because we should have "free markets". Free markets allowed folks to sell snake oil that was mostly booze and claim all kinds of benefits for it. It seems that what we needed was someone to step in and change banks and the stock market into lending institutions and corporate funding sources rather than huge confidence schemes. When you look honestly at our current system, the case for more government, not less, can be made quite strongly.

My own losses were over thirty thousand on my primary residence, over twenty thousand on a home that I had purchased a year before the collapse and totally renovated, and over fifteen thousand on my rental which now costs me money to own. The bankers who financed my purchases never lost a dime. I was not one of the people who sought to "make a killing" in real estate. Each home that I bought provided me an opportunity to give-away my time and talent for the betterment of my community. Each home that I purchase, and it has been nearly half a dozen now, uses 30-50% less energy when I am done renovating. In addition they are more comfortable, require less maintenance, have more usable space and often produce food from their yards while requiring less mowing than when I purchased them. I never expected more than to use my properties as a hedge against inflation, perhaps eventually being able to sell them off for retirement, but that plan will have to be abandoned. Regaining over thirty percent losses will take quite a long time, even when the economy recovers.