April 19, 2006
Is There A Federal Deficit?
Printer FriendlyBy: Walter Williams
Let's push back the frontiers of ignorance about the federal deficit. To simplify things, I'll use round numbers that are fairly close to the actual numbers.
The nation's 2005 gross domestic product (GDP), what the American people produced, totaled $13 trillion. The federal government consumed $2.4 trillion, but it only received $2 trillion in tax revenues, leaving us with what's said to be a $.4 trillion budget deficit.
By the way, it's sheer constitutional ignorance to say that President Bush spends or lowers taxes. Article I, Sections 7 and 8, of the U.S. Constitution gives Congress authority to spend and tax. The president only has veto power that Congress can override.
Getting back to deficits, my question to you is this: Is there truly a deficit? The short answer is yes, but only in an accounting sense -- not in any meaningful economic sense. Let's look at it. If Congress spends $2.4 trillion but only takes in $2 trillion in taxes, who makes up that $.4 trillion shortfall that we call the budget deficit? Neither the Tooth Fairy, Santa nor the Easter Bunny makes up the difference between what's spent in 2005 and what's taxed in 2005.
Some might be tempted to answer that it's future generations who will pay. That's untrue. If the federal government consumes $2.4 trillion of what Americans produced in 2005, it must find ways to force us to spend $2.4 trillion less privately in 2005. In other words, the federal government can't spend today what's going to be produced in the future.
One method to force us to spend less privately is through taxation, but that's not the only way. Another way is to enter the bond market. Government borrowing drives the interest rate to a level that it otherwise wouldn't be without government borrowing. That higher interest puts the squeeze on private investment in homes and businesses, thereby forcing us to spend less privately.
Another way to force us to spend less privately is to inflate the currency. Theoretically, Congress can consume what we produce without enacting a single tax law; they could simply print money. The rising prices, which would curtail our real spending, would act as a tax. Of course, an important side effect of doing so would be economic havoc.
Some Americans have called for a balanced budget amendment to the Constitution as a method to rein in a prolific Congress. A balanced budget is no panacea. For example, suppose Congress spent $6 trillion and taxed us $6 trillion. We'd have a balanced budget, but we'd be far freer with today's unbalanced budget. The fact of business is that the true measure of the impact of government on our lives is not the taxes we pay but the level of spending.
The founders of our nation would be horrified by today's level of American servitude to their government. From 1787 to the Roaring '20s, federal government spending, as a percentage of GDP, never exceeded 4 percent, except in wartime, compared to today's 20 percent.
The average taxpayer, depending on the state in which he lives, works from Jan. 1 to May 3 to pay federal, state and local taxes. That means someone else decides how four months' worth of the fruits of the average taxpayer's labor will be spent. The taxpayer is forcibly used to serve the purposes of others -- whether it's farm or business handouts, food stamps or other government programs where the earnings of one American are taken and given to another.
This situation differs only in degree, but not in kind, from slavery. After all, a working description of slavery is the process where one person is forcibly used to serve the purposes of another. The difference is a slave has no rights to what he produces each year, instead of just four months.
Posted by redguy at April 19, 2006 01:50 PM
Trackback Pings
TrackBack URL for this entry:
http://www.redstatesusa.com/mt/mt-tb.cgi/462
Listed below are links to weblogs that reference Is There A Federal Deficit?:
» bontril from bontril
huy guys, very good blog <a href="http://www.fistashki.com/">tramadol</a> <a href="http://valium.vpojw.info">valium</a> <a href="http://meridia.gdbdf.info">meridia</a> [Read More]
Tracked on May 10, 2006 05:29 AM
» xanax from xanax online
hey guys, very good interesting theme! [Read More]
Tracked on May 11, 2006 02:06 AM
» msn plus free download
college from msn plus free download college girls nude recipes for
msn plus free download college girls nude recipes f... [Read More]
Tracked on June 2, 2006 02:07 PM
Comments
Dead on! Well done, Mr. Williams. I wish citizens and lawmakers would take a serious, long-n-hard look at HS 25, The Fair Tax Bill and see how this could help remedy this. It would most definitely "free us slaves" and encourage spending. www.fairtax.org
Posted by: Epicure
at April 20, 2006 01:51 PM
Bravo Mr. Williams,
You can smell the 'rat' at work when they amend the laws to state that 'We the People' cannot use force to defend private property. If WE cannot own property, or defend what WE own against the IRS gestapo, if we can be TAXED off of our property through arbitrary tax laws, then, technically, WE are SLAVES.
Big Brother came in with FDR who criminalized private ownership and private commerce. Next step was removal of the laws that hold 'them' accountable while in office ... which just makes them all the bolder in their crimes.
The final step is the fleecing of America by people who should be arrested under the articles of RICO.
Spending is an addiction ... our politicians either go cold turkey on their own, or 'We the People' need to have them confined and detox'd before they do irrevocable harm.
This isn't a dictatorship ... if people don't like the laws, get rid of the people, and the party, that sponsor those laws at the ballot box, then change the laws.
Ironically, if there is a tax tyranny, it is one that is 'voted' in by the public.
Yep, it's that simple.
Posted by: Athling
at April 20, 2006 09:46 PM
I’ve read and reread this one and I am confused. In the past I have been accused of not being very intelligent or have good comprehension skills and to that I say, “Ok.” But I don’t understand what Walter is talking about. How is it that the deficit exists only in an accounting sense? The example given is of more being spent then acquired. That creates a deficit. And who does make up the difference between what’s taxed and what’s spent. It has to be paid somehow. Of course the government can spend today what’s going to be produced in the future. I do that every time I use a credit card. I don’t know that our founding fathers would be horrified at today’s tax situation. They did some questionable things in their own time. In the end, taxes are the price we must pay for civilization. Every citizen has a say, albeit a very small one, in how taxes are spent. There has never been a time when even so much as the slightest majority has been satisfied with their taxes. Yes, to a degree we are slaves; but applying that logic, to a degree, we are all prisoners. People have been trying to get off this planet for years and while they manage to escape the surface, all have had to return or die.
Posted by: MikeR
at April 24, 2006 12:51 PM
Death & Taxes...the two certainties of life :-) And until We, the People, can somehow get term limits in force for all congressional positions, there will always be those who feel "they know best" and that the common man/woman should just sit back and let them handle "important" matters such as determining where our tax $$ should be spent. In my opinion, most of the new members of congress truly have the desire to make a difference. However, after a few years of service, bringing home the "pork" - I have actually read those exact words from our representative - he is proud of all the $$ he brings, the prospect of a full pension, unlimited health care etc etc change the dynamics so completely that any thoughts of good deeds usually go out the window. And the cost of government goes up and up and up!
Posted by: JASCC
at April 24, 2006 08:36 PM
Dear Jascc; You are correct, Term Limits NOW! However, we already have term limits for Senate, (6 year term, indefinitely reeligible) The House (2 year term, indefinitely reeligible), POTUS & VEEP (both 4 years, [the POTUS limited to twice elected max]. What is required is an Amendment to the Constitution stating Tenure & Government Employment Limits. The Senate should be three 6 year terms=18 years max. The House nine 2 year terms=18 years max. This would limit their influence to one generation, (see Letters-Jefferson to Madison 9/6/1789 & Madison reply to Jefferson 2/4/1790). The POTUS & VEEP should be three 4 year terms=12 years max, a President and his party if the People elect; should have enough but not too much time to implement programs. And not to be left out, The SCOTUS, and all Fed judges should be One, randomly staggered, 12 year appointment to any one Bench Post; with One 12 year re-eligibilty to the same Bench Post. A SCOTUS Justice & most other Judges would have to be especially meritorious to be re-appointed since they would be re-eligible under another President. Since all employees of all levels of jurisdiction in the US are required to swear oath or affirm to protect, uphold, obey, & defend the US Constitution; (it would be good if they read it) then it is reasonable to place limits upon their Tenure & Employment as well. No One CITIZEN has an inherent right or privilege to any government office or job, nor may they hold any government office or job whether elected, selected, appointed, enlisted, hired, commissioned, or contracted for more than 36 years total government service employment at any level: Federal State, Local, or quasi-government. nor more than 30 years at any one level of government, nor more than 24 years in any one job position or rank, except where specifically "grandfathered". NOW! Agree/Disagree? Other ideas?
Posted by: enemaofthestatusquo
at April 25, 2006 01:01 PM
I wholeheartedly agree - limited years of service would go a long way toward better government. Somehow we must stop looking at government positions as "lifetime" (as the French do!)
Posted by: JASCC
at April 25, 2006 04:46 PM
By last count, there is 133 billion dollars in uncollected debt in America.
This little number drives the prime rate far more insidiously than 'inflation' ... in fact, it is the bulk of inflation. Yet, every day, in every way, we are solicited to get just one more credit card and transfer the debt.
There is NO deficit ... YOU are paying off the uncollected debt for all of the parasites.
The national budget works the same way ... the only deficit is 'projected' debt that YOU are going to eventually pay to support all of the parasites.
It's all very carefully calculated.
Posted by: Athling
at April 27, 2006 01:11 AM
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)