Deficit spending at the federal level is a much bigger problem than at the state or county level. States and counties cannot print money. The U.S. government is stealing us blind, destroying our will to take care of ourselves, and driving us into bankruptcy. If a state or county did this, somebody would go to jail. Counterfeiters and forgers belong in jail; not roaming marbled halls or huddled inside paneled Washington offices.
The letter below was published in the Gwinnett Daily Post on October 21, 2003.
As citizens, we have an obligation to understand how county, state, and federal governments obtain money. There are only so many ways governments can raise money. Their methods have a direct impact on our lives and prosperity. Here’s the short version.
At the state and county level; government funds come from property, sales, or income taxes. If taxes fail to match the amount needed, they can issue bonds. This is the same as borrowing from future tax receipts. There are only two options when state and county spending outstrips tax receipts and the ability to borrow. They can raise taxes or cut spending.
States and counties have a hard time hiding long term deficit spending. Prolonged deficits at the state and county level quickly go into the “high visibility” zone like they have in California and like they did when New York City faced bankruptcy in the 1970’s.
Unfortunately, visibility changes at the federal level. Deficit spending at the federal level is shrouded in political subterfuge and bad economic policy. Consider the evidence. The federal government just finished issuing tax refund checks at the same time tax receipts were going down and spending was going up.
The U.S. federal debt is increasing by $1.7 BILLION per day. Please let this number sink in.
Federal government has one additional trick that states and counties do not have. They can print money. U.S. dollars lost their gold backing in 1971. That’s when President Nixon stopped foreign countries from redeeming U.S. dollars for U.S. gold. Thus, each new dollar printed means every other dollar’s value gets watered down. That’s why $22.49 in 1971 had the same purchasing power as $100 in 2002. Maintaining our 1971 standard of living is much harder today.
Massive deficit spending has created economic distortion throughout our economy. Debt keeps piling up everywhere, yet credit keeps expanding. Common sense tells us this cannot continue indefinitely. Ask yourself why so many store fronts are vacant and why so many homeowners face foreclosure?
We have demanded federal government grant every wish and take care of every need. They are attempting to do it and unless something changes, bankruptcy is a certainty.