Thursday, March 3, 2016

Now Brazil Runs Out of Other Peoples' Money

My man Kevin D. Williamson is writing about America's Big Problem. No, it's not Trump, it's the Budget. As Kevin is a focused guy, he always asks visiting politicians about this at National Review's coffee and conversation meetings.
I have put the question more or less identically to many of them: “Given that almost all of our spending is on popular programs (Social Security, Medicare, Medicaid, national defense) or effectively non-negotiable spending (interest on the debt), how would you balance the budget?..."
Of course, the visiting pols always answer with fudge, or, as Kevin puts it "hogwash." Nevertheless, he writes, "somebody is going to have to answer that question, someday."

No they won't. The question will be answered, instead, by national debt default. As in Brazil, which is facing a financial crisis as its debt spirals out of control and the government sits there frozen in place. Here is The Telegraph's resident financial Cassandra, Ambrose Evans-Pritchard. He quotes a former state secretary of planning.
"There is a loss of confidence in the ability of the government to manage its debts. We face the risk of default," he said. Three quarters of the budget is effectively untouchable, locked in by a web of welfare payments and regional transfers..."
 In Kevin-speak, talking about the US, we could say that:
About than [sic] 80 percent of federal spending is on Social Security, medical benefits, the military, and interest on the debt.
But politicians dare not speak about cutting any of that. Not until the nation "goes Greek" or, in this case, Brazil. At that point, it's like the popular song "Comes love, nothing can be done."

Nothing can be done about the entitlements when things are great; nothing can be done about the entitlements when the economy is spinning out of control. Nothing can be done in the wreckage of the economy after hyperinflation and sovereign debt default, except that the entitlements, whatever they were, are now unaccountably worth a lot less. It must be love. But, since "nothing can be done" it is just too bad.

It's easy to say that there has to be a better way, but the fact is that there has never been a better way. That is why I have developed my General Theory of Government.
A government is an armed minority occupying some territory and taxing the inhabitants thereof to reward its regime supporters.
Notice that there is nothing here about cutting rewards to regime supporters. I wonder why.

In the old days the supporters were marcher lords and the central government had to keep those obstreperous lords semi-happy or they would march from the border marches to the capital city and know the reason why. Think Henry IV Part One and Harry Percy, son of the marcher Earl of Northumberland.

But these days the regime supporters are you and me, the voters that elect politicians like Barack Obama to give us Hope and Change or Donald Trump to Make America Great Again. And what we want is loot. We want our Social Security, our Medicare, our veterans benefits, our free education, our affordable housing, and so on. And woe betide the politician that dares even to mention the word "cut."

My little contribution to this is my website usgovernmentspending.com. Its Breakdown page shows pretty well exactly what Kevin shows. The only difference is that I show the next big thing, after Social Security, health benefits and defense and welfare. Education. Most of education is taxed and spent at the local level. Free, dontcha know.

But the worst of it is that, even after a nation goes Greek, or Argentina, or Venezuela, or now Brazil, people still don't get it. They still want their free stuff as regime supporters. Or else.

That's why I call it my General Theory of Government.

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