Don’t worry, be happy---the government debt will take care of itself

Saturday, December 03, 2005
"PORKBUSTERS UPDATE: Reader Douglas Bass emails:

I ran into Heidi Frederickson, Congressman Mark Kennedy's staffer, in Keegan's Irish Pub, during the weekly caucus of the Minnesota Organization of Blogs. I mentioned that I had gotten her mentioned on Instapundit, and she told me that she had shown Rep. Kennedy all the Porkbusters web pages. Is it a coincidence that Mark Kennedy cast the deciding vote to cut $50,000,000,000 in spending? I think not!

Heh. Indeed.

posted at 07:25 PM by Glenn Reynolds

I adamantly disagree with those who are overly concerned about America’s growing debt. This problem will essentially take care of itself. There are two major reasons for my nonchalance. We are increasingly living in an era of instant communications with our elected officials. Transparency is the key. They are starting to be intimidated by the countless e-mails and phone calls over projects such as the Alaskan “bridge to nowhere.” There is no question but they are now having second thoughts about these dubious expenditures. Yes, Instapundit and the rest of the blogging community deserve to take a bow. Investors will also inform the politicians when they have had enough of their nonsense. They will simply vote with their money. The price signaling of the markets gets everyone’s attention. By 2008 this problem will have virtually disappeared.

7 comments:

Morgan said...

I'm not worried for a third reason.

The general fund deficit is running at about $600 billion a year. Sounds like a lot, but it's roughly 5% of GDP, it's denominated in nominal dollars (so that, like your mortgage, inflation makes it seem smaller with time), and inflation plus GDP growth is currently running at 6-7%.

If we ran $600 billion deficits indefinitely, they would eventually become insignificant; if we ran deficits of 5% of GDP indefinitely, while inflation + growth ran about 7%, the national debt would eventually stabilize at 5/7ths (about 71%) of GDP. Not much more than it is today.

Of course I want government to refrain from wasting my money, but the country is not going bankrupt. The forces you described only make me more confident in the future.

Syl said...

I'm not worried for a third-point-five reason.

We can leave it for our children to pay. But they can leave it for their children to pay who can leave it for...

David Thomson said...

Politicians until the very recent past made deals in virtual secrecy. Yes, the information concerning government spending was per se public information---but it was quite difficult to get your hands on it. Furthermore, you had to spend an enormous amount of money and time to voice your opposition. This is simply not the case anymore. Long distant phone calls are almost free and the vast majority of literate Americans possess an e-mail address. It was only a few years ago when one had to be relatively affluent to keep up with the stock market. I now can go to my Yahoo page within seconds and I’m not charged a single penny for the service. The same is quickly becoming true regarding governmental spending proposals.

Morgan said...

So, what happens when the current version of China goes out of business as a country (like the Saddam Hussein version of Iraq went out of business)?

If we are supposed to forgive debt that was incurred without the consent of the people, does that mean we don't need to pay out on the securities bought by that government without the people's consent?

David Thomson said...

I’m confident that we will work something out with the Chinese people. These type of problems can be resolved when those involved legitimately try to come up with a win-win solution. China will behave itself if a no-nonsense Republican is in the White House. God help us, however, if a liberal Republican or a Democrat is our national leader.

Morgan said...

Syl:

My projections show my children broke enough already. I'm thinking it might be cheaper to build a time machine and send them back a few dozen years for an education.

terrye said...

The deficit has come down 23% in the last year. If that continues it will be cut in half {at least} when Bush leaves office.

I think a lot of folks like Glenn do not realize that some of that spending makes it possible for people to buy a new house rather than pay for Mom's nursing home.

Not all government spending is a bridge to nowhere and if we get too carried away we might well end up spending more somewhere else.