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January 29, 2008

The State of Our Union is…..

Posted in: Monetary Policy, The Evidence

In a sad homage to his neocon handlers, President Bush offered up a full slate of new spending initiatives and revenue reducing plans in last night’s State of the Union address. The President proposes new government programs to address health care, defense, ‘homeland security’, and for ‘educating the children’, in addition to various increases in ‘funding’ for existing programs.


Bush is clearly pushing the idea that we need to ‘invest’ more in the public sector, but a cynic might ask how long the people are willing to keep throwing more money at an investment that isn’t paying off. In fact, as investments go, investing in our government over my lifetime has been a bigger fiasco than dumping your life savings into the market six weeks ago. Both would be fiscal disasters; the difference is – in the market, I can sell my stock and cut my losses. In the protection racket that is American government, I’m forced to double down repeatedly, and thus far, just compound my losses.

IRS sucks

Of course, he throws bones to the nominal conservatives (that would be a professed conservative who has no idea what that means), proposing $300,000,000 in spending for what he calls ‘Pell Grants for Kids’. On a philosophical level, I suppose that if we are going to suffer the burden of public funding for education (and all the inherent waste and inefficiency that accompanies this construct), one can argue it might as well be extended to include schools that parents actually select for their children. I would argue that it simply expands a bad idea (public funding of education), making more waste and inefficiency likely, and probably opening the institutions on the receiving end of the funds further to the heavy hand of government regulations. Does anyone out there suppose that there won’t be strings tied to those subsidies?

At a time when we are teetering on the precipice of the financial abyss, I would offer that showing fiscal discipline would be the proper course of action. While redistributionists might laud the President’s call for increasing Aids funding by 30 billions over the next five years, the reality is that we’re talking about taking $100 out of the pockets of every man, woman and child in America to fund your do-gooding. That’s $500 for my family, and that’s money that I could use to feed and educate my children, or to generally improve our standard of living. While I have no argument with funding aids research specifically, the answer is not to take more funds from the working people of America. If this research is worth funding, make a humanitarian case for funding. More evil is wrought through your do-goodery with stolen funds than is ameliorated with the stolen loot.

This roadmap for continued deficits and easy credit means more weakness for the dollar ahead, and rising prices of most all staple commodities. The purchasing power of the lower and middle classes will continue to erode because our elites find there to be greater operational imperatives than improving the financial health of our nation. An objective observer would be hard pressed to make a case that the intention wasn’t to bankrupt us as a nation. Whether the intention or not, that is the outcome.

hot cash

We’re maxed out on our proverbial credit cards; we spend more than we make; We’re not even keeping up with the interest payments on our debt. We’re like the college student who finds himself under crushing credit card debt due to imprudent fiscal decisions, who decides that the proper course of action is to get more credit cards, surfing the debt from one to the other and racking up even more debt. Instead of biting the bullet and paying for our imprudence, we’ll just go for broke.

All of this, and a lecture about how we need to hand over yet more of our precious freedoms so that our elite masters in the far off capital can keep us safe from the terrorists hiding under our beds. The State of our Union is broke – and also stupid.

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