Comments on: Deficit Spending and Future Generations: Not What You Might Think http://www.thefreemanonline.org/featured/deficit-spending-and-future-generations-not-what-you-might-think/ Just another WordPress weblog Sat, 21 Nov 2009 11:57:50 -0500 http://wordpress.org/?v=2.8.6 hourly 1 By: Paul http://www.thefreemanonline.org/featured/deficit-spending-and-future-generations-not-what-you-might-think/comment-page-1/#comment-17858 Paul Mon, 28 Sep 2009 19:25:38 +0000 http://www.thefreemanonline.org/?p=9399#comment-17858 Hmm . . Paragraph 1 says we aren't shifting real costs to our children. Paragraph 4 says we aren't mortgaging our children's future to people in other countries by selling debt to foreigners. Paragraph 7 says that deficit spending will cause our children to pay higher taxes to pay those who hold the notes. So if we are paying the true costs now--and our children are also paying for something in the future, in money and in freedom--what is it that our children actually will be paying for that is being precipitated by today's government borrowing? A coercive wealth transfer that doesn't pay for anything--any real debt obligation--sounds like pure theft to me. If someone has a note or bond that says that future taxpayers owe them principle and interest--those are borrowing costs--direct consequences of deficit spending. So how can it be both things--that all of the costs of deficit spending are incurred through "opportunity cost" now, and there is a cost consequence as a result of today's deficit spending for future generations? Whatever the answer to that dilemma, the principle remains that it is unjust for younger generations to pay for their elders government programs. I would propose that no one be liable to pay taxes to support any government program that was instituted before that taxpayer reached voting age. Of course, as soon as you apply for a government benefit, you would become liable for the corresponding tax. Each 2-year Congress could vote to extend the application of programs to the newest voters, subject to the wrath of their constituents. This, however, sets up a new tyranny-of-the-majority problem where 18-20 year olds could always be outvoted by their elders. But there should be a direct accounting and correspondence between taxes and benefits so people know what they are paying for. But one thing for sure--that age group would be the most vocal and politically active of any. Hmm . . Paragraph 1 says we aren’t shifting real costs to our children. Paragraph 4 says we aren’t mortgaging our children’s future to people in other countries by selling debt to foreigners. Paragraph 7 says that deficit spending will cause our children to pay higher taxes to pay those who hold the notes. So if we are paying the true costs now–and our children are also paying for something in the future, in money and in freedom–what is it that our children actually will be paying for that is being precipitated by today’s government borrowing? A coercive wealth transfer that doesn’t pay for anything–any real debt obligation–sounds like pure theft to me. If someone has a note or bond that says that future taxpayers owe them principle and interest–those are borrowing costs–direct consequences of deficit spending. So how can it be both things–that all of the costs of deficit spending are incurred through “opportunity cost” now, and there is a cost consequence as a result of today’s deficit spending for future generations?

Whatever the answer to that dilemma, the principle remains that it is unjust for younger generations to pay for their elders government programs. I would propose that no one be liable to pay taxes to support any government program that was instituted before that taxpayer reached voting age. Of course, as soon as you apply for a government benefit, you would become liable for the corresponding tax. Each 2-year Congress could vote to extend the application of programs to the newest voters, subject to the wrath of their constituents. This, however, sets up a new tyranny-of-the-majority problem where 18-20 year olds could always be outvoted by their elders. But there should be a direct accounting and correspondence between taxes and benefits so people know what they are paying for. But one thing for sure–that age group would be the most vocal and politically active of any.

]]> By: John http://www.thefreemanonline.org/featured/deficit-spending-and-future-generations-not-what-you-might-think/comment-page-1/#comment-13428 John Fri, 05 Jun 2009 15:38:06 +0000 http://www.thefreemanonline.org/?p=9399#comment-13428 Unless I'm missing something, this article doesn't address an additional potential consequence. That additional possibility could be paying back the “bondholders” in the future with inflated dollars (seems like we went through this in the past to a certain degree during the 1970s). I do understand that inflation is another form of “wool over the eyes” taxation on future generations, but also the “bondholders” are cheated as well. (Perhaps that is what was being alluded to in 2nd to the last paragraph). The people who benefit most from higher inflation are borrowers – and the biggest borrower in an era of deficit spending is the government. Only those assets that are somewhat immune to inflation (such as real estate and rents – once this “busted bubble” has stabilized) and those who borrow long term (as an example - 30 year mortgages) will be the least damaged from this deficit spending and in some cases are helped. That being said, the best thing our federal government should do would be to cut spending by at least 50% across the board for each existing federal program. None should be exempt from cuts and all should be equal (initially) and their annual budgetary increase should be a % that is half of the inflation rate.. That increase should also be on a sliding scale – the higher the rate of inflation, the lower the percentage should be. (as an example, if inflation is 5%, the spending would increase by only 2.5% - however if the inflation rate is 10%, the spending should increase only 4% etc.) If government spending were cut by 50% and decreased as inflation rises, it would be a good start. Then tackle the issue of taxes. Any surplus in taxes would have to be returned proportionally to those who paid the taxes. Tax cuts without corresponding spending cuts are not very beneficial. 1st deal with spending, then deal with taxes. Unless I’m missing something, this article doesn’t address an additional potential consequence. That additional possibility could be paying back the “bondholders” in the future with inflated dollars (seems like we went through this in the past to a certain degree during the 1970s). I do understand that inflation is another form of “wool over the eyes” taxation on future generations, but also the “bondholders” are cheated as well. (Perhaps that is what was being alluded to in 2nd to the last paragraph). The people who benefit most from higher inflation are borrowers – and the biggest borrower in an era of deficit spending is the government. Only those assets that are somewhat immune to inflation (such as real estate and rents – once this “busted bubble” has stabilized) and those who borrow long term (as an example – 30 year mortgages) will be the least damaged from this deficit spending and in some cases are helped.

That being said, the best thing our federal government should do would be to cut spending by at least 50% across the board for each existing federal program. None should be exempt from cuts and all should be equal (initially) and their annual budgetary increase should be a % that is half of the inflation rate.. That increase should also be on a sliding scale – the higher the rate of inflation, the lower the percentage should be. (as an example, if inflation is 5%, the spending would increase by only 2.5% – however if the inflation rate is 10%, the spending should increase only 4% etc.) If government spending were cut by 50% and decreased as inflation rises, it would be a good start. Then tackle the issue of taxes. Any surplus in taxes would have to be returned proportionally to those who paid the taxes. Tax cuts without corresponding spending cuts are not very beneficial. 1st deal with spending, then deal with taxes.

]]> By: Lexi http://www.thefreemanonline.org/featured/deficit-spending-and-future-generations-not-what-you-might-think/comment-page-1/#comment-12372 Lexi Tue, 26 May 2009 17:17:09 +0000 http://www.thefreemanonline.org/?p=9399#comment-12372 This article outlined perfectly what I've been trying to understand. I think most of us know that deficit spending is harmful, fewer understand why. This is the perfect explination, in simple terms, to explain. Even a high schooler like me can understand it! This article outlined perfectly what I’ve been trying to understand. I think most of us know that deficit spending is harmful, fewer understand why. This is the perfect explination, in simple terms, to explain. Even a high schooler like me can understand it!

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