Henri Reynard Speaks Out

SARS Or Government?

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Well maybe government isn't as infectious as SARS or nearly as deadly, but it evidently is being treated like a disease of epidemic proportions. Certainly the people in this Administration are trying to starve the government to death by first reducing taxes, then quarantining revenues in the military budget and triaging domestic priorities like public health budgets. Two trillion dollars is a lot of money so one might reasonably ask what is going on that all of the necessary services of government are being reduced across the country? Every state in the union and every major city in the country face unprecedented cuts in services this year. Remember Homeland security? Well that begins at home and our Police and Fire Departments around the nation are being hit with cuts that will reduce their effectiveness substantially. After years of support from the Feds these vital Public Services are facing dramatic reductions in funding driven by tax cuts passed based on false projections of revenue. Any federal funds dedicated to Homeland Security will not reduce the impact of these cuts.

If you think of our multi-layered system of government as a complex living organism with money as its lifeblood and the Federal budget as the circulatory system you won't be far off. That organism is getting less blood these days and its immune responses to attack are being weakened. Transfusions of debt can make up the deficit for a while but they harm the economy over time by reducing the money available to society for other investment opportunities. Taxes are returned to the economy rapidly, and stimulate growth when they are applied to jobs programs and other service connected areas. Debt financing used by the government is also rapidly returned to the economy but it has a direct impact on the cost and availability of capital for private use. Since most jobs in a healthy growing economy are created by new businesses that effect of government borrowing can hurt employment by making capital too expensive for businesses to expand. Employment is the greatest engine of economic growth; economic growth simply cannot be sustained in a period of shrinking employment. Our economy and our government are completely interdependent; if the economy gets a cold the government suffers from the same sets of chills and fevers.

Increasing taxes also has an impact on the level and cost of capital available for private purposes. There Ain't No Such Thing As A Free Lunch, otherwise known as TANSTAAFL is a good mantra to remember when addressing these issues. Tax cuts also have consequences and benefits apparently some beyond the ken of mere mortals like our President and his economic advisors. We are trying to shrink government today by choking its ankle and bleeding it from its head. This methodology will damage government but it is going to hurt people more because government lacks a nervous system. It feels no pain at all no matter what you do to it. You could chop off its foot and it will grow another one eventually, and the new one will cost more than if you had maintained the old one instead of chopping it off. Now I have watched as efforts to shrink government have expanded its budgets from a few hundred billion dollars to two trillion dollars and marveled at the efficiency of the processes devised for shrinking bureaucracy. The new method is evidently to keep government growing but cut off the blood supply by bleeding revenues into the coffers of wealthy corporations and individuals. The theory is once debt gets high enough then government will have to quit growing.

The genius who devised this methodology has evidently not read history or economics enough to clearly understand what will happen when the government gets too far in debt. It will crank up the printing presses stupid! Governments have done this since time immemorial or at least since we have stopped using gold or some other limited commodity to define the value of our currency. We dropped the gold standard in order to put a growth bias on our economy, inflation at a managed rate is part of that strategy. Try buying a good five-cent cigar, heck if you can get a good cigar for five dollars today the government isn't taxing it enough to pay your medical costs in the future. Our economy is dependent on our government for growth, dimwit! It has been for a very long time, ask the guys who built the railroads; which were built on massive land grants from the government. Manipulating government is how some of us made our massive fortunes, have you forgotten that simple fact, bozo?

It is a government that resists corruption because it is elected most of the time. It is a government that reflects the will of the people or their lack of will whichever prevails at the moment. It is a government that has grown large because we are rich enough to afford a large government. It is no disease! In the words of a truly great man it is a "government of the people by the people and for the people". It will always do our will if we make our will clear to those we have elected to run it. Even the current crew of misguided miscreants with all of their propaganda and machinations will bow to that will in the end. It is from the consent of the governed that the powers of just government are derived. We are responsible for what it is, it is never our enemy, it is us!