Two and a half trillion dollars. That’s a lot of money. That’s what some Republicans in the House of Representatives want to cut out of the national budget over ten years. That’s two and a half bucks, followed by twelve zeros.
Doesn’t sound like much, when you say it that way, does it? It isn’t. Two and a half trillion dollars is what the United States spend on medical goods and services in ONE YEAR. Spread that out over ten and you’re looking at two hundred and fifty billion a year. That’s just short of one third of what we handed to Wall Street in one month to bail out their banks. Seven hundred billion dollars that was, in one fell swoop — just in case you forgot the number, like I did.
But, however you say it, two and a half trillion dollars isn’t much. Because, when you come right down to it, money is worthless. That’s especially true when the money is sitting in somebody’s bank vault (more secure from mice and bed-bugs that the proverbial mattress), making the hoarders feel good about themselves; not to mention superior to all those hard working slobs who don’t have enough money to put food on their children.
Actually, it’s not two and a half trillion dollars (our nation’s annual medical expenses) that are being hoarded. No, at last report, back in 2010, what our industrial and financial wizards were holding out in cash was three trillion ($3,000,000,000,000) dollars, equal to the cost of the Iraq War up until 2009, according to Joseph Stiglitz. Are they waiting for something or are they, like the fabled Croesus merely mesmerized by their wealth? Warren Stephens, the bond broker down in Arkansas, says that “uncertainty” has got them in its thrall — that they can’t do anything with their money until they know what happens next.
I don’t believe it. Why? Because now they’ve got their minions in Congress nattering about cutting the national budget to reduce the national deficit and decrease the national debt, which is exactly what Stephens and his friends like to “invest” in, so they can live off the dividends and enjoy their golf game in peace. After all, that’s why every time Republicans get control of the purse strings (get a majority in the House), they increase the deficit (collect less in taxes than they spend) and increase the long-term national debt. Their guru Greenspan even announced the intent agenda when he referred to the worrisome surplus back in 2001.
The most recent projections, granted their tentativeness, nonetheless make clear that the highly desirable goal of paying off the federal debt is in reach before the end of the decade. This is in marked contrast to the perspective of a year ago when the elimination of the debt did not appear likely until the next decade.
I believe, as I have noted in the past, that the federal government should eschew private asset accumulation because it would be exceptionally difficult to insulate the government’s investment decisions from political pressures. Thus, over time, having the federal government hold significant amounts of private assets would risk sub-optimal performance by our capital markets, diminished economic efficiency, and lower overall standards of living than would be achieved otherwise.
I just love that word “eschew.” It does not mean that Greenspan was holding back a sneeze or about to spit out a truth. Indeed, what follows is a convoluted way of saying that if the government has lots of surplus money in the till (“private assets,” my ass), the people will want to decide how it’s used (political pressures) and that would put the profits of the traditional allocators of credit (capital markets) at risk and their “standards of living” (high off the hog) will be decreased. After all, it’s much more profitable to lend our public corporations money and collect a steady trickle of dividends, than to pay one’s fair share of social obligations (taxes). The lenders’ standard of living will fall, if they can’t count on that triple treat (low local taxes, high dividends from bonds and no taxes to the feds).
But, that three trillion hoard does suggest there’s a real problem. However, not-spending is not a serious solution, because the problem is a revenue-shortfall — for the lenders. Lending money to the Treasury hasn’t been as profitable as the lenders would like. And the states haven’t been as willing to borrow long-term to make up their current revenue short-falls, either. Not as willing as they used to be, probably because that federal stimulus program sent about seven hundred billion spendable dollars for the states to spend, without having to depend on the bond rating agencies to give them an OK.
Imagine spending money on public works without having to ask the bankers and bond brokers and rating agencies for permission. The only reason Alan Greenspan wouldn’t consider that efficient is because his friends on Wall Street don’t get their trickle down.
President Obama has already announced that he’s going to propose more federal stimulus spending — i.e. free money to the states. We can expect Wall Street to have a fit. But, it’s their own fault. In their fixation with financial engineering, they forgot that money is for spending and that it’s worthless, unless it’s spent for something real. Money is a figment of the imagination, a lubricant for our exchange and trade, so it has to be incorporated in real, tangible assets, to give it value. Otherwise, the greenback is just like Monopoly money or confederate dollars.
Republicans proposing not to spend $2.5 trillion dollars is one more reason to call them the Party of No. Whoop-dee-doo.