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A Trillion Here, A Trillion There...
According to the quote popularly attributed to him, Sen. Everett Dirksen once said of Congressional appropriations "a billion here, a billion there, and pretty soon you're talking about real money". One wonders if Sen. Dirksen realized that his flippant regard of taxpayer money would look parsimonious 50 years hence, as the floodgates of government spending have opened to previously unimaginable levels.
In fighting the current economic "crisis", the government has already spent at least a trillion dollars. President-elect Obama is calling for an "economic stimulus package" of close to another trillion dollars. And now, state governors are asking for their own trillion dollar bailout. A trillion here, a trillion there, now it seems we're talking about real money.
With the proposed bailout of state governments, what is ultimately being asked is for residents of states with low tax burdens and/or effective government management to subsidize those with high tax burdens and/or ineffective management. This, of course, means that state governments have less incentive to be good and efficient stewards of their taxpayers' money, as well as perhaps prolonging the political careers of ineffective government officials. Federal money to the states in this regard will incentivize more government programs and more wasteful spending.
But there's another issue involved with all these bailouts and the trillions of dollars the government is doling out: how is the government going to pay for all this? Obviously, there are only three ways, and all of them have deleterious long term effects on the economy and on individual liberty.
The first option is for the government to raise taxes. This means less money in the hands of the citizens who earned it; instead, the government is deciding that it knows better than individuals and families how their own money should be spent, how their own property is best utilized. Every dollar taxpayers send to the government is a dollar that can't be used for school supplies, rent or mortgage, food, or a new car or vacation.
The second option is for the government to borrow money. Of course, our government already owes trillions, not to mention long term commitments that are mandated spending but not reflected in the actual debt. Borrowing simply kicks the can further down the road, meaning that future generations will pay for our bailouts now. It also crowds out raises interest rates, making private borrowing more expensive.
The third option is simply to print more money. But doing this devalues our currency, meaning the money we already hold buys less. Inflation is great for debtors — you're repaying a loan with cheaper dollars — but horrible for investors and for creditors. There's already a supposed "credit crunch", so the last thing we want is to have less incentive to provide credit.
At its heart, any bailout plan is a government giveaway of one person's property to another and an establishment of a special privilege for one group at the expense of another. Government is at its worst when it is acting thusly. The federal government should say no to the states and let the state governments work out their own recovery.
In fighting the current economic "crisis", the government has already spent at least a trillion dollars. President-elect Obama is calling for an "economic stimulus package" of close to another trillion dollars. And now, state governors are asking for their own trillion dollar bailout. A trillion here, a trillion there, now it seems we're talking about real money.
With the proposed bailout of state governments, what is ultimately being asked is for residents of states with low tax burdens and/or effective government management to subsidize those with high tax burdens and/or ineffective management. This, of course, means that state governments have less incentive to be good and efficient stewards of their taxpayers' money, as well as perhaps prolonging the political careers of ineffective government officials. Federal money to the states in this regard will incentivize more government programs and more wasteful spending.
But there's another issue involved with all these bailouts and the trillions of dollars the government is doling out: how is the government going to pay for all this? Obviously, there are only three ways, and all of them have deleterious long term effects on the economy and on individual liberty.
The first option is for the government to raise taxes. This means less money in the hands of the citizens who earned it; instead, the government is deciding that it knows better than individuals and families how their own money should be spent, how their own property is best utilized. Every dollar taxpayers send to the government is a dollar that can't be used for school supplies, rent or mortgage, food, or a new car or vacation.
The second option is for the government to borrow money. Of course, our government already owes trillions, not to mention long term commitments that are mandated spending but not reflected in the actual debt. Borrowing simply kicks the can further down the road, meaning that future generations will pay for our bailouts now. It also crowds out raises interest rates, making private borrowing more expensive.
The third option is simply to print more money. But doing this devalues our currency, meaning the money we already hold buys less. Inflation is great for debtors — you're repaying a loan with cheaper dollars — but horrible for investors and for creditors. There's already a supposed "credit crunch", so the last thing we want is to have less incentive to provide credit.
At its heart, any bailout plan is a government giveaway of one person's property to another and an establishment of a special privilege for one group at the expense of another. Government is at its worst when it is acting thusly. The federal government should say no to the states and let the state governments work out their own recovery.
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