Despite the facts that 1) the
money the DoD spends puts a lot of civilians in the private sector to work, and
2) a period of high unemployment/underemployment (with decreased real wages to
boot) is hardly the time to start tearing holes in the safety net, national
defense and transfer payments are the first two areas everyone wants to start
with when budget-trimming begins.
Before we go further, though, I
should address a couple of odd concerns.
First, one might say, “Y’know, Layne, for a guy who professes to write a
Catholic blog, you’re awfully shy
about saying what’s specifically Catholic about your position. So far, we haven’t seen anything that an
irreligious person couldn’t write.”
Exactly. You might stop and ponder that observation for
a while. Especially if you think being
religious means constantly introducing some weirdo spin that no “reasonable”
person could dream up to a social or political position, or if you think it
means being unable to justify an argument without constant resort to holy
scriptures.
Truth is, while Catholic social
doctrine does allow for some limited government intervention in poverty and
business, the Church has no formulaic approach to the problem … it isn’t,
strictly speaking, part of general revelation. In general she prefers that government action
be taken at the lowest practical level; the principle is called subsidiarity.
But while the Church doesn’t mandate a
statist approach to the matter, she does frown on laissez-faire economics as an abandonment of responsibility. Had Bl. Pope Leo XIII, the author of the
landmark social-justice encyclical Rerum Novarum,
heard Benjamin Franklin’s sentiment that property in excess of a man’s duty to
himself and his family belongs to the public,[*]
he might have winced and said, “That is too drastic a formula; say rather that
the right of property is not absolute, but may be called upon by the people
according to reasonable need.”
If I show distaste for cutting
transfer payments, then, it’s not because the Church teaches an obligation of
the state to provide them at the federal level.
Rather, it’s my personal conviction that this is one thing I would
rather the state do badly than no one do at all. And when those who advocate cuts in transfer
payments start by dividing the populace into “makers” and “takers”, they almost
invariably commit a grave injustice, a sin of rash judgment — a species of
false witness (Ex 20:16; Dt 5:20) — against the vast majority of the poor by
ranking them among the “takers”.
Much of Republican reaction to
the national debt is, to put it mildly, “sticker shock”. It’s hard to imagine a billion anything, except as a series of nine
zeroes after some more pedestrian number.
A trillion is simply unimaginable … you may as well try to visualize
sixteen googol dollars.
And yet, the government collects
over $4 trillion a year because over a hundred million people pay taxes in
quadruple or quintuple digits, because tens of thousands of businesses pay
taxes in anywhere from five to ten digits.
If a trillion is unimaginable, math at least makes it comprehensible.
On the other hand, a balanced
budget is not a sin; rather, it’s good stewardship of the people’s money
(assuming, of course, that all other funds are well-spent).
I must say with grudging respect
that, in the years ’09, ’10 and ’11, interest payments on the national debt
were a smaller percentage of total federal spending than at any other time
since 1960, especially in the twenty years embracing the Reagan, Bush père and Clinton Administrations. It doesn’t follow, though, that the
government can continue to spend in the red indefinitely. As the debt grows, so does the interest it
generates; if government receipts fail to grow at the same rate as the debt,
then interest payments begin to crowd out other budget items. Why?
Because all debt is a claim on assets, and as such take priority over
all other obligations save those that are absolutely essential to survival.
Then there’s the myth of How
Deficit Spending Ended the Great Depression.
Yeah, GDP and industrial production
were back up to their 1929 levels by 1940. However, unemployment was still in double
digits (sound familiar?), only dropping back under 10% when the FDR
Administration began drafting soldiers and ramping up production of war
materiel for lend-lease to Britain and the Soviet Union in the last year of
peace, 1941. Two years later, production
had doubled and the nation was experiencing labor shortages as the country
maintained a military that would peak the next year at over 8 million
servicemen. (Today, by contrast, the
numbers of active and reserve personnel are almost equal, totaling about 2.96
million members.) It was World War II,
not government spending per se, which
got the economy working at full capacity; some economists argue that the New
Deal spending actually protracted the Depression.
Is that really the model of “putting the nation back to work” that we want
to follow?
Finally, there’s the concern
that, by deficit spending, the government essentially sells pieces of itself to
the banks. So long as the government borrows
more than it repays, banks, financial institutions and wealthy private
investors essentially have an open-ended income stream coming from the public
till, as well as a form of leverage on public policy.
Less-than-arm’s-length
associations between the federal government, especially the New York Fed, and
the finance industry has led to allegations and persuasive arguments of “regulatory
capture” (the subversion of government regulation through cronyism) and “corporate
welfare”. While the desire to profit
from public money can exist at all income levels, only the wealthy truly have
the resources to spend in rent-seeking
behavior.
This is a particular criticism of
the TARP program and SecTreas Timothy Geithner’s role in the “backdoor bailout”
of Goldman Sachs, Merrill Lynch, Deutsche Bank and Société Général through
federal purchase of credit-default swaps from AIG. It’s also a criticism of the Obama Administration’s
failure to break up the “too big to fail” institutions; as
former Fed chairman Alan Greenspan told the Council on Foreign Relations in ’09,
“If they’re too big to fail, they’re too big,” noting, “Failure is an integral
part, a necessary part of a market system.”
Are such critiques fair or
accurate?[†] As the rabbi said in the story, “True they should be yet?”[‡] A kind of “Caesar’s wife” rule applies here:
Whether or not the charges are true, they shouldn’t even arise. If you don’t want someone to suspect a fire,
you shouldn’t create any smoke.
So on the whole, a balanced
budget and paydown of the national debt is a very good idea — when the economy
is booming, unemployment is low and the government can maximize its
receipts. When seven percent of the
labor force is unemployed and another seven percent is underemployed, when the
total labor force has shrunk despite the continuing increase of the population
base, when three quarters of the jobs created since the “end” of the recession
have been in the government sector, then the economy is not healthy.
Certainly not healthy enough for
massive cuts in either military or safety-net spending.
[*] “All the Property that is
necessary to a Man for the Conservation of the Individual & the Propagation
of the Species, is his natural Right which none can justly deprive him of: But
all Property of the Publick, who by their Laws have created it, and who may
therefore by other Laws dispose of it, whenever the Welfare of the Publick
shall demand such Disposition” (Letter
to Robert Morris, 12/25/1783).
[†] Who’s taking over
whom? Such involvement is damned equally
as “privatizing success and socializing failure” by liberals and “lemon
socialism” by conservatives. If there’s
confusion over which end is the cart and which the horse, then the two ends are
too close together.
[‡] An old rabbi approached
his younger colleague and said sadly, “My heart is heavy and my words are like
lead, for I have heard a rumor about you——”
“It’s a lie!” the young rabbi exploded.
“I know the rumor you speak of, rebbe,
and there’s not a shred of truth in it!”
Whereupon the elder drew himself up and thundered, “True it should be yet! Isn’t
it bad enough that it’s a rumor!?”
