printHere are some salient points I’ve picked from Anthony de Jasay’s essay, “Shall We Borrow from the Children?”:
* Government expenditure rises first, “with revenue seldom if ever catching up. The money never runs out, for unlike households, the government can always borrow whatever it needs to cover the deficit, almost regardless of how large it is. It owns a sort of widow’s curse whose magic lies in the state’s power to raise the taxes in the future that it has no stomach to raise in the present. The day of reckoning need never come, for old borrowing is always refinanced from new borrowing.”
* “… the markets tolerate high ratios for unsecured government borrowing whilst they would demand individual debtors to put up some security.”
* “Governments buy support by spending money, not by siphoning it away in taxes. Spending now and deferring the matching taxes to an indefinite future is dictated by the most elementary political know how and it should not surprise nor shock anyone to see it happen again and again, especially when elections approach and politicians start getting desperate. They are not wicked [I disagree], they are just playing by the democratic rules. That the electorate is quite content with these rules, or at least does not try to alter them is perhaps more difficult to explain. It may be that the bulk of the electorate just does not see the connection and cannot be bothered to think about it.” [Or perhaps they are “wicked”?]
* “The US has tried to stem [the deficit and public debt problem] by placing a ceiling on the federal debt, a measure whose only effect is to oblige the Congress to raise the debt ceiling every time the rising debt catches up with it.”
[SNIP]
The “contrast between [the electorate’s] collective and private behavior” is evident in the polls, if they are to be believed. “Americans strongly oppose government shutdown,” yet “the majority of Americans [also] oppose President Obama’s demand that Congress raise the debt ceiling without any spending cuts—by a margin of nearly two to one.” [Heritage]