The Election Will Make Everything Worse

A website called Daily Kos posted a fantastic opinion piece last week.

And by fantastic, I mean so stupid that it makes that pig who built his house out of straw seem positively Mensa by comparison.

The headline of this brain-dead story:“The Deficit, the National Debt, and why we don’t have to worry about them.”

I won’t name the writer. No need to heap shame upon those in mental decline.

Instead, I will focus on the point of the story—namely that the unnamed writer has read a humorously wrong book called The Deficit Myth. This is a book I have ridiculed in the past because it is fundamentally misguided. Financially askew. Monetarily amiss.

To drag this out a beat longer… the book and its author, a Stony Brook University economist, are flat out wrong in their position that something called Modern Monetary Theory solves all of America’s debt woes.

I’m broaching this topic because debts and deficits most assuredly do matter. They’re America’s biggest Achilles Heel, and they’re going to get worse after Nov. 5, no matter the victor.

The US election features two candidates who are oblivious to the impacts of their policies and their belief systems. Neither talks meaningfully about dealing with America’s greatest national security threat—debt’s destruction of the US dollar—and they are instead focused on programs and policies that will, 100% guaranteed, exacerbate the problem.

Among other stated plans, Team Blue wants to extend Biden’s Tax Cut and Jobs Act, expand child tax credits and the Affordable Care Act subsidies, support affordable housing, and exempt tips from income taxes. All of those might be worthy causes. But when you’re essentially bankrupt, you kinda gotta deal with your needs before expanding your list of wants.

As for Team Red, it has its own litany of wildly expensive promises: Exempt overtime and tips from taxes, end taxation on Social Security, lower the corporate tax rate to 15%, strengthen the military, extend personal tax cuts, impose inflation-inducing tariffs on the entire world…

Team Blue’s ideas will add roughly $3.5 trillion to $8.1 trillion to the debt over the next decade. Team Red will add between $7.5 trillion and $15.1 trillion. Those numbers aren’t mine—they come from the non-partisan Committee for a Responsible Federal Budget. So they have some ties to reality.

The message is that no matter how the election shakes out, Americans are going to shoulder far more debt.

Which brings me back to the fantastically stupid notion in the Daily Kos column, which asserts that “The danger of a growing deficit is a myth.”

Insert canned studio-audience laugher here…

The opinion-writer is basing his assertion on the aforementioned book and its assertion that any government with the power to issue its own fiat currency does not ever have to worry about too much spending—too much debt. It can simply print as much money as it needs, and it can continually adjust tax policies (raising and lowering taxes) to keep a reign on inflation that all the money printing would otherwise fuel.

Let me say immediately that I am not a trained economist with a PhD from this prestigious university or that.

But I do have a functioning brain.

I can process cause-and-affect.

I can see the path from here to there very clearly.

And I can look back across history and realize that too much money in the system is dynamite waiting on a match.

Moreover, I am wise enough to know that politicians are not going to raise taxes when inflation is hot in order to control spending, and thus lower inflation. Think about how counter-intuitive that is. Actually, think about how stupid that is relative to your own pocketbook today.

Prices are up, it’s harder to make ends meet… and imagine that today’s Congress announces that it is raising personal tax rates as a way to dampen spending and, thus, inflation.

Seriously??

How quickly do you think voters will vote those politicians out of their cushy, overpaid jobs?

As clown-brained as most politicians are, every last one of them is smart enough to know that taxation is one of the hottest hot-button issues among voters. They know that raising taxes into an inflationary period is them signing their own pink slips.

They will not do it.

Most will want to cut taxes or find some other way to alleviate the pain on their constituents’ pocketbooks. Heck, that’s precisely why Teams Red and Blue are both yammering about eliminating taxes on certain types of income or expanding/extending tax credits for certain families.

So what would we, as a country, be left with in an MMT world?

Extreme amounts of debt and no way to deal with it, except by printing more money to pay the extreme amounts of interest Uncle Sam owes on that debt.

If Mensa had a Bizarro World opposite, those who tout this monetary abomination would be a shoe-in for membership.

Alas—and this is the sad part—I fear none of it matters.

This coming presidential election is guaranteed to grow America’s mountain of debt. It’s guaranteed to increase the annual debt repayments the country must make, and which already are roughly 15% of the federal budget.

And it’s guaranteed to hasten the moment when a debt-heavy America tumbles into crisis, which will slam the US dollar and, in turn, rip through American families far worse than did the 2008 housing collapse.

This is a very real threat to America’s source of stability—the dollar.

Once a debt crisis removes that stability, America will be forever changed.

And not for the better.