Yesterday we received a Federal Budget with significantly larger deficits for longer than were projected in the election. We need to clearly understand the reasons for this expansion and exactly how we’ll judge how well our children’s money is being spent.
Below is a column where I first called public debt the crack-cocaine of the political class. It was published in October 2013 when the US Congress was deadlocked about funding and the EU was in debt crisis.
Deficit spending has a place in long term management of our society, but when our governments incur debt on our behalf, we need to ensure that the debts have a purpose, the results are quantifiable and that everyone understands the goals and duration.
Published October 9, 2013:
The constitution of the US is brilliant but it never could have seen the present day problems of the political class, including slack morals, self-serving ethics and general lack of responsibility to individual voters. Political parties are huge businesses, labour unions are huge businesses, and lobby groups and PAC’s are huge businesses.
Part of the problem is average voter’s perception versus reality: Many average Americans can’t find enough money to own health insurance, yet ask them and they mostly feel they live in the greatest country on the planet.
The US Congress has approved decades of irresponsible budgets with massive deficits becoming new debt and then the business of politics shuts down their own government while politicians fight over raising the debt ceiling to cover the very costs that they approved. That is just bone headed stupid and irresponsible. For once I agree with Obama, not on programs or content but on the requirement for a government to approve funding of the programs it passes into law. Some worry the US may collapse the world economy by defaulting, that risk will get bigger with every passing year of excessive deficits.
Sometimes in political discussions I confuse my message by using Conservative vs. Liberal or Republican vs. Democrat. I’m coming to the point that I believe I must simply start using Responsible vs. Irresponsible to properly differentiate political ideology. I believe strongly that today all political parties are corrupted with significant irresponsibility, and that there is not yet a Responsible Party to lead us away from the messes of debt and unsustainable thinking the world is in. I also believe that, without a major financial crash rooted in government overspending, the people of modern democracies don’t really want or can’t handle the truth and changes that a truly Responsible Party would need to bring to the table.
In systems without responsibility balance checks and balances, the responsible always recover first and thrive best long term. The EU model seems to have few solid balance points for fiscal responsibility, therefore Greece, Spain, Italy, Portugal and others have been able to spend their way into future oblivion while funding social programs beyond their ability to raise tax dollar and the resulting irresponsible levels of debt drag the collective some way downward.
In the same collective political structure, the Germans and Brits are usually better off than most of the rest of the EU, and the Swiss remain small outsiders who seem to always responsibly take care of themselves for the past, present and long term future. I can’t help but say that responsibility that’s not entrenched in law (legislating zero deficits and debt repayment into law is a logical start) depends mostly on the psyche and moral underpinnings of the society. Will we take more than we’ll pay for? Or, are we willing to pay for all that we get and retire that debt in our own lifetimes? Will we ever elect a political party that is truly responsible?
The risk of US financial collapse in the near future seems almost inevitable. No one will escape easily, but a very few countries are more isolated from the effects. Some would call them boring, but Switzerland is probably one of the best isolated from that risk and one of the most potentially self sufficient places on the planet, largely because they’re too responsible to choose to be like the rest. Most of Scandinavia is in that responsible class that will hunker down and survive with simple responsibility accepting the hard work required.
If the US continues at this impasse they’re suffering or worse, defaults and triggers a really dramatic crash, Canada is in a very dangerous position. The Canadian middle class is struggling these days, fueled in part by loss of a significant number of manufacturing jobs and lack of growth in incomes. Many of our prized social programs, including universal healthcare, are available to all citizens but significantly funded by employment related taxes, so as unemployment rises so do those costs.
So how exactly does political irresponsibility creep in? I’ve always felt that the concept of deficit spending is the beginning. Simply put: spending more than we’re willing to tax is irresponsible theft from the future of a society seeking present political gain or illusion of peace. Giving people more government and government programs, social assistance or even wars than they are willing to fund with present generation tax dollars is irresponsible. One of many examples: If my government is using my tax dollars to advertise what they’re doing for me, I think them to be irresponsible because they’re running government like a business with no real cost of money and advertising is propaganda that benefits very few.
Debt is the crack cocaine of the political class and debt beyond reasonable short term limits is just irresponsible. In the recent past we simply counted on inflation to mitigate much of the long term damage of the debt we allowed our politicians to pile up. Prices went up, incomes rose and the past debt seemed less significant. A rise in inflation and the subsequent rise in interest rates might suddenly tip a very fragile recovery to a very bad crash.
In the end, we must look to the fundamental roots of democracy and blames ourselves for voting parties with unsustainable and unaffordable ideas into power. We’re all to blame for the dramatic rises in recent past debt levels of our country, province, or town. It’s time to accept that we’re all responsible for today’s problems and it’s time that we start insisting that all of our governments each start acting responsibly for the quality of our futures.