Information about RSS

Spending and Debt in Greece and the U.S.
by Jacob G. Hornberger

Greece is in a severe economic crisis arising from excessive government spending and ever-increasing government debt. Reflecting concerns of a possible default in the payment of Greece’s bonds, the credit-rating agency Fitch has downgraded the rating of Greek debt. To deal with the crisis, the Greek government has proposed severe cuts in government spending.

Wait a minute! I don’t understand. I thought that excessive government spending and mounting debt were supposed to be beneficial to a society. Isn’t that what U.S. officials tell us about the out-of-control federal spending that characterizes our government? Don’t they say that the national debt, which continues to soar each minute, doesn’t really matter because we owe it to ourselves (and, well, to the Chinese communists too)? Don’t they quote the famous economist John Maynard Keynes to justify this never-ending “stimulation” to the economy?

Well, if it’s all so great, how come Greece is now in a severe economic and financial crisis because of it?

The truth, which we have been emphasizing here at FFF for 20 years, is that out-of-control government spending and mounting debt is a very bad thing for every country, including the United States. It leads a nation down to road to moral debauchery and monetary and economic chaos.

In principle, public officials are no different anywhere. Federal officials here in the United States love to spend other people’s money as much as Greek officials do. There are always grandiose projects on which to spend money, both here and abroad.

Advocates of the American welfare-warfare state claim that unlike Greece, there is no chance of a default in the payment of the ever-mounting U.S. debt.

That’s ridiculous. Like the Zimbabwean government, the U.S. government is embarking on an inflationary road by which it intends to do the same thing it’s done ever since the Federal Reserve was established in 1913: crank up the monetary printing presses to pay its ever-increasing expenses and ever-mounting debt with newly printed money.

That’s a default. It’s no different in principle from saying to creditors, “We’re going to pay you 70 cents for each dollar we owe you.”

Why don’t Greek officials simply print the money to pay off their bills and debts, like the U.S. government does? Because they’re part of the Euro zone, which include many other countries, and, therefore, lack the power to crank up the monetary printing presses.

Today, there are thousands of Greek people dependent on federal largess who are protesting the proposal to slash government spending. They’re crying, “You can’t cut our dole. It’s our right to continue receiving it.”

It’s really no different from how the beneficiaries of America’s welfare-warfare largess would react if U.S. officials proposed a massive cut in federal spending. Senior citizens, universities, doctors, banks, Wall Street, the military-industrial complex, and countless more would go into hyper-drive exclaiming, “You can’t do this. It is our right to continue receiving the dole.” They would even cite national security as a reason.

It’s just more proof of what a disaster it was when Americans abandoned the free-market, limited-government way of life on which our nation was founded in favor of paternalism, interventionism, militarism, and imperialism. Once tens of thousands of people became dependent on the government largess of the welfare-warfare state, it became a certainty that they would fight vociferously to continued plundering and looting the productive class.

Here is the solution to all this moral debauchery and economic and monetary chaos:

(1) Repeal, don’t reform, every single socialist and interventionist program, agency, and department of the federal government, and discharge the federal workers into the private sector.

(2) End the occupations of Iraq and Afghanistan, bring all overseas soldiers home and discharge them into the private sector, and dismantle the entire military-industrial complex.

(3) Abolish the Federal Reserve and restore sound money by separating money and the state.

(4) Abolish the IRS and income tax, leaving people free to keep everything they earn and decide what to do with it.

Jacob Hornberger is founder and president of The Future of Freedom Foundation. Send him email.