Call me crazy, but I enjoy shoveling snow. As a result, I’ve enjoyed the winter because we’ve had plenty of it to move around.
I’m now of an age where the news reports a few people each year whose last breath on this earth was taken face down in a snow bank after digging out from a storm. If that happens to me, you will know that I went out happy.
I know some readers are hopeful of such a scenario, and sooner rather than later. Intuitions, feelings and biases rule the world, and, when I’m writing about current events, I try to stick to the facts. Facts are hard things to overcome.
But I was writing about shoveling snow. I do own a snowblower, a 30-year-old Deutz-Allis model that still starts on the first pull, which I use in the aftermath of big storms. But a couple of weeks ago, in seven days we had three snowfalls of less than an inch, and the only solution was to take 30 minutes each time to clear the driveway.
The snow shoveling itself is a mindless task, but that’s what makes it fun. It helps to get the blood flowing, and that helps distill thinking about whatever I happen to be writing about that week.
So it was that a fellow asked me what I thought about the “sequester.” This is a political catchword like “fiscal cliff” that comes into vogue for a month or two. Everybody uses it knowingly while having only minimal understanding of what it means.
The sequester took effect Friday, cutting $85 billion of federal spending over the coming year. Republicans have said that is only 2 percent of total federal spending, and if we can’t survive that, we were doomed anyhow. Democrats say, yes, but the problem is that entitlements spending will not be included, so the cuts in the affected areas, like defense, will be much more severe.
It’s like the old economic joke about the difference between a recession and a depression being that a recession is when somebody else loses their job and a depression is when you lose your own job.
I believe that the government, being controlled by bureaucrats and being advised by the liberal Obama administration, will most likely attempt to make the cuts as painful as possible for the taxpayers. Thus, I expect to have to stand in line longer before getting on an airplane, wait longer for a passport or a tax refund, etc.
This is the standard comeback to attempts to rein in government spending. For bureaucrats, tax dollars are their lifeline, and no one is rewarded for saving a few dollars on behalf of the taxpayers.
Taxpayers, for their part, are well meaning, too, but the politicians have figured out if they give them stuff like free health care, the politicians’ “generosity” will be rewarded with re-election. Everybody appreciates that they get about $200,000 more in Medicare benefits, for example, than the number of dollars they contribute to it.
The problem is that nobody else, not the rich, not corporations, not anyone is paying for it. Instead, the politicians have been borrowing money. The result is that today, taxpayers are spending $360 billion to $450 billion per year just to service the nation’s $16.5 trillion debt.
That’s about $4,585 for a family of four, which gets no benefit from that debt service payment. The benefit goes to bond holders, many of them foreigners. It’s been said that so much of our national debt now goes to China, that it could fund the entire Chinese army.
The problem for the politicians is that when they try to bring the budget more into balance, the liberals and the bureaucrats cry that the sky is falling.
So it was that in the summer of 2011, the liberals wanted to increase the federal debt limit, and conservatives said they would not vote to do so without a better plan to rein in federal spending. So, as politicians are wont to do, they came up with a solution conveniently set up to take place after the 2012 election. That solution included tax hikes, which the Democrats wanted (although not in the form that actually occurred), taking effect on Jan. 1, and spending cuts, which the Republicans wanted (also not in the form that actually occurred), that took effect Friday.
The result of the tax hikes was that the CFO of Walmart, the nation’s largest retailer, said last week that the beginning of February resulted in the worst sales for the company that he had ever seen.
So there you have it. Don’t raise taxes. Don’t cut spending. Just let the mountain of debt keep growing. That will work just fine until the folks willing to lend to the government get nervous again. Then, the government will be forced to raise interest rates, making this sequester look like a mere bump in the road, as debt service squeezes out even more government spending.
Eventually, if allowed to continue, the nation will have to default — meaning it will just declare bankruptcy and walk away from its obligations. When that happens, it will be the end of socialism, and with it all of the entitlements, because nobody will be willing to lend to a government that can’t be trusted to pay its debts.
Maybe, like shoveling snow, it’s pointless to argue these points. Eventually the snow will melt whether it’s shoveled or not. Eventually the hard truths of economics will force us to live within our means. The difference is that for most, snow shoveling only results in a few aching muscles. Reneging on the national debt will result in considerably more pain and suffering.
Tom West is the editor and general manager of the Record. Reach him at (320) 632-2345 or by e-mail at [email protected]