Tuesday, July 10, 2012

Repudiate the Reagan Myth -- and the Public Debt

In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of $1 trillion. . . . .The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan a chance to bring about a balanced budget and to begin to reduce the debt. . . .
Murray Rothbard: The Public Debt's
Worst Enemy

Famous last words.-- Murray Rothbard, (http://mises.org/daily/1423/Repudiating-the-National-Debt)

Republicans, and all like-minded fiscal conservatives and Tea Party advocates, must renounce the Reagan hagiography.

Rising into office to beat back the liberal-Keynesian eruption of state power and stagflation (a by product of loose money and looser fiscal morals), Reagan then forced his conservative Republican allies to support raising the debt ceiling, which would mean lifting the bar on public spending beyond one trillion dollars.

Today, the United States is saddled with FIFTEEN trillion dollars in national debt, and with no let-up in sight.

The Bush years culminated in the Troubled Asset Relief Bailout, a monumental loan, all at taxpayer expense.

Murray Rothbard advances a unique and commendable argument regarding the public debt. The red ink does not belong to the individual citizens of the United States, but rather to the federal government, which has chosen annually to spend beyond its means, racing through tax revenue with nothing but deficits and a dangerous national debt, pushed closer to default with every Congress.

The Austrian Economist proposed that the United States could just repudiate the debt altogether. The reaction would be swift and damaging, to be sure, but the measure would discourage future loans from private creditors, which is a worthwhile outcome. Governments have no right to spend money that they do not have, and if they cannot borrow to paper over heady promises made in more flush times, then voters will either inform themselves enough to support a candidate who will offer just enough, but nothing more.

Ronald Reagan pushed his conservative caucus to raise the debt ceiling, and there has been no looking back since then, until now, with the rise of the Tea Party movement, a concentrated caucus of Congressman who will not budge on spending. No one should begrudge their obstinacy, since for three decades after the landmark 1980 election, Republicans and Democrats have jumped into the spending spree that has been bankrupting this country ever since.

Republican voters, and all fiscal conservatives, need to lay to rest once and for all the beatification of Ronald Reagan, whose rhetoric failed to measure up with the reality of spending growth, which is now looming over the country more ominously than ever.

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