Why is it that when one is a conservative Republican, the most unsupported and absurd comments about the economy or economics are said and taken for granted as truth?
Here’s just one recent example that raised my gall:
Dorsey D. Farr, co-founder and head of investment strategy and portfolio management for French Wolf & Farr, told the Rotary Club of Buckhead in Atlanta at a January 30, 2012 luncheon that ongoing labor market weakness, household deleveraging, consumption growth and sovereign debt will continue to be tough issues with which to tangle in 2012.
Well, fair enough, and who could argue with the assessment?
But then Farr went on to say with professorial certainty…
“…defeating the debt monster requires a revision to the social contract that created it. That takes either enormous political will or a crisis.”
Really? No, I mean, REALLY!?
As Bill Clinton left office, we ran budget surpluses and were well on the path to paying off the total US debt. So, what we really want to look at is what caused the dramatic change in direction, the rising yearly budget deficits, and the yawning total US debt after Clinton… meaning W. Bush and Obama.
First… the social contracts for Social Security have run surpluses and helped to fund the deficit spending… not contributed to the deficits.
Moreover, doing absolutely nothing but following the law, Social Security and associated social spending will not and cannot contribute to the deficits, as Social Security may only spend what money it has and takes in. Thus, when fifteen to twenty years from now it is out of excess cash, it can only pay out to retirees the amount of money raised each year from Social Security taxes.
All this means is that given no other changes, future retirees will see a somewhat reduced monthly payout — NOT a stoppage of payout… NOT any deficit spending…
OK… none of that causes or contributes to the deficit or debt, so I’m still lost as to how the Social Contract led to our deficits and unsustainable debt or threatens the debt future, Mr Farr.
Obama Vs. W. Bush On The Deficit
So, Mr Farr, let’s see where since Clinton our deficits and the burgeoning debt originated:
Humm, well, I grant that the Part D Medicare Drug benefit that was not initially funded properly contributed to the debt and is part of a social contract. That means that of the $15 Trillion total US debt, $5 Trillion came from W. Bush in non-social contract spending!
Bottom line: W. Bush’s non-social contract spending and tax cuts caused one-third of our total US debt… not, sir, as you and other Republicans nonchalantly propound.
Sustainable & Non-Sustainable Debt
One complaint of the current debt situation is that it is 100% of yearly GDP. History has shown this amount to be a drag on economic growth and the overall financial health of a nation. What has been deemed historically supportable is a US debt level of 62-65%.
Well, take out W. Bush’s non-social contract deficit and debt contributing contributions, and you have a $10 Trillion debt against a $15 Trillion economy… or 66%!
Wow, so the un-sustainability of our US debt is NOT from social contract spending but from Bush’s absurd tax cuts, two unfunded wars (Iraq and Afghanistan), non-defense discretionary spending, and the effects of his crashing the economy!
Mr Farr, get a grip and do your research… do not just assume that because you’re conservative and Republican that your pontifications are granted truth.
Final Thought: The Absurdity of Austerity
As once practitioners and the ill, alike, advocated blood-letting and leeching to cure sickness and disease — draining vital life fluid and energy from the frail and weak… so today must society suffer self-imposed and popular austerity to cure an anemic economy. In both times, the hope was that the patient didn’t die from the cure.
In our dystopian world today, Republicans propose drastic budget cuts to the social contract that in no way contributed to our current debt problem. Yes, in a world where 70% of the economy is consumer driven, conservatives propose starving the consumer of cash by reneging on pre-agreed social programs and austerity.
Good luck with that.
Hope I live through it! Hope most of us patients live through it, too. As for the bloodletters and their supporters, ah, not so much : )