Mark Steyn – Kindly Note the Impending Bankruptcy:
My Gallic charmer is on to something. According to the most recent (2009) OECD statistics: government expenditures per person in France, $18,866.00; in the United States, $19,266.00. That’s adjusted for purchasing-power parity, and yes, no comparison is perfect, but did you ever think the difference between America and the cheese-eating surrender monkeys would come down to quibbling over the fine print? In that sense, the federal debt might be better understood as an American Self-Delusion Index, measuring the ever widening gap between the national mythology (a republic of limited government and self-reliant citizens) and the reality (a 21st-century cradle-to-grave nanny state in which, as the Democrats’ convention boasted, “government is the only thing we do together”).
Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent and revenues are 41 percent – a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent – the widest spending/taxing gulf in any major economy.
This weekend I heard someone at another table talking about big government and small government. Those terms are entirely relative. A little bigger or a little smaller than what we have now is still big. What’s more, right now there’s about a dime’s worth of difference between Democrat and Republican politician’s notions of spending.
One thing that’s absolute is whether the government can write the check to pay for the services it’s providing. Last fiscal year the government borrowed 40 cents of every dollar they spent. So far this year it’s 46 cents on the dollar. That doesn’t count the off balance sheet expenditures, such as the quasi-governmental Federal Reserve buying $40 billion a month of bad debt from banks.
The annual deficit has been a trillion plus for four years. Total national debt is 16 trillion. Once Treasury interest rates go from the current 2-3% back to their historical average of 5-6% we’re in deep doo-doo.
We can’t afford the government we have with the amount of taxes we’re collecting and no one wants to pay the taxes it would take to afford it. It isn’t that’s something’s gotta give. It’s that something’s gonna give. Whether it’s inflation, Treasury buyers revolting, or something else, borrowing 46 cents for every dollar you spend is going to end badly.