I, Heretic

Here I am going to spout heresy. I am going to argue that the fiscal policies being followed by President George W. Bush represent a breakthrough in conservative — yes, conservative — thinking. They represent good policy; and even better strategy.

I will suggest that President Bush understands money better than any President we have ever had. He understands it better than most economists. He understands it better than our illustrious pundits. President Bush understands money the way a financier understands money. He sees it as a force or a power that one squirts at the world to make the world change. He sees it as a weapon.

This is not how accountants view money, and it is not how most economists view money. And it is certainly not how any ordinary citizen could view money. But in the mind of a President of the United States, such thinking has the potential to lead to some rather revolutionary results.

Prior to his recent speech concerning the rebuilding of New Orleans, President Bush was already being lambasted by critics from right to left for what appears to be some rather profligate spending behavior. There is pork in River City. There is the $500 billion prescription drug benefit. There is the War on Terror, involving huge expenditures in Afghanistan and Iraq. There are what Democrats call tax cuts, and what the rest of us must still call tax rate cuts even if revenues have risen. And now comes what sounds like two hundred billion more in federal spending to build a shining city in a bowl.

This raises questions. Such as, for example, where is all this money supposed to come from? What about the deficit? What about the national debt? Why are we saddling our children with still more debt they will have to pay off? Whatever happened to small government? We're spending like Democrats! Why? Whatever happened to fiscal discipline? How can anyone call this conservatism?

1. China. Well, China and Japan. 2. We are taking on debt. Ergo, a cash deficit. So? 3. It's about where it ought to be. 4. We aren't. 5. The public doesn't want it. We have to teach them to want it. 6. How long, Oh Lord, will our side be on defense? 7. Who says we don't have it? Do they know what they're talking about? 8. Watch.

Here's where we get the money: our citizens earn it in their businesses or by performing their jobs. They spend it on things they need. A lot of those things are imported. The cash ends up in the hands of foreigners. The U.S. government borrows it back. Note carefully that our consumers now have the stuff, and our government has the cash. Is this a good deal, or what? What the foreigners have is a debt instrument. Good for them.

Here is why we take on debt: He who has the cash makes the rules. If we have the cash, we get to say how it's spent. Remember, money is power. It is a force you squirt at the world to make it change. We drive the change, when and where we want. What the foreigners get is a debt instrument. They are passive investors. Those are the best kind. This is especially important with respect to China. China is accumulating massive amounts of our debt. Good. Better that than they should have the cash, which they would probably spend on things that we would think are scary. Every dollar we can get them to loan us another dollar they don't have for building battleships. Bush understands this. Too many people don't.

Here's the deal with the national debt: Debt is about acquiring cash now, from somebody else. An institution should do that any time it thinks it can earn a return on the cash that is higher than the interest it must pay on the debt. In actual practice, people start to get uneasy if an institution's debt starts to exceed a certain percentage of its total capital. For companies in the U.S., 50% debt is pretty high. In Japan that's low; Japanese companies rely much more on debt financing than on equity when financing their businesses. There is no right answer to how much debt is the "correct amount." It's one of those things that "depends." For a government, the question is sort of weird, because there is no such thing as owning "equity" in a government. At least, not in the financial sense. For a government, a better measure might be its ability to service its debt, i.e. how much of its actual cash revenue (taxes and fees) is needed to pay the interest on its debt? So long as that looks reasonable, no one should get too worried. Instead they should think about, as Bush obviously does, how we might invest the cash we get from new debt so as to produce a higher return than the interest rate on the debt. If we do that, we don't care how large the debt gets. We'll always be able to service it.

Our children are not going to have to pay it back. Institutions are not individuals. For our purposes, institutions are immortal. If some of their debt comes due, they simply roll it over. They can do this perpetually. IBM probably has debt on its books that's been there since the 1920's. It's been rolled over several times. No one cares. So long as IBM sees opportunities for investing cash that return more than the interest rate, they will never pay the debt back... they'll just keep rolling it over. And then the Sun burns out. This can be a difficult concept for non-finance-types to understand. But it is crucial to understanding what's going on here. So long as the U.S. economy keeps growing... so long as we have opportunities to invest cash in ways that earn a higher rate than we have to pay in interest... we should keep rolling over our debt, and adding more as we can, forever. All these people who moan about the chillrun do not understand this game. The chillrun aren't going to pay it back. They don't have to. They're going to roll it over, and add more of their own. As will their children. Until the Sun burns out.

Here's why we don't have small government: People don't want it. They say they do, but when you threaten to give it to them, they vote for the Other Guys. It took Republican politicians decades to figure this out, and most Republican voters still haven't figured it out. The fastest way to become the minority political party in the United States is to become the party of government frugality and fiscal discipline. Let the Democrats do that. We've been there, done that, and have Bob Dole to prove it.

Besides, the Democrats are lying. The minute they got in, they'd start spending like, well, like George Bush and the Republican Congress are spending. But there's a difference: they'd be spending it on their stuff. More social engineering. More government-dependency programs. More crosses soaked in more urine on more government grants.

For decades, Republicans played defense with money. Tied to this idea about "small government" in a country where people didn't want that, the best idea they could think of was to build speed bumps on the Road to Socialism. This while the Democrats got to call the shots because Republicans wouldn't call any when they got in. They'd be "responsible." They wouldn't spend as much. All they did was conserve borrowing capacity for the next time the Democrats got their hands on the spigot. What the rest of us got was a ratchet that clicked left when the Democrats were in, and just sat there when the Republicans were in.

Now comes George Bush to play offense with money. Folks, this is a new idea. Think about what we can do here. We get to call some shots. George Bush can see this, why can't anyone else? Is our highest priority right this minute "small government?" Is it "reduced spending?" Is it "balance the budget?" I don't think so. I think our first priority is to survive. There are some really crazy people out there who think we should all be Moslem, or dead. There are a lot of them, and they are nuts. They have a lot of money. They are very, very dangerous and thinking anything else is likely to be suicidal. So that's priority one. We can quibble over the details, but spending money to survive is not a bad idea.

So what's next after survival? Can we now balance the budget? I say no. I say the next priority is to reverse the decline of our civilization. Surviving won't have that much utility if we all end up as savages clubbing one another. We all just got a very clear demonstration of what that looks like. We've seen it before, too. In fact we've seen it almost everywhere that Democrats have had their way in imposing their values on citizens through government dependency programs. There is a message in this. It is that the "ratcheting" has to stop. Like it or not, we either spend money to have our values reflected in this society, or the Democrats will keep pushing us toward Lord of the Flies.

Did anyone really listen to George Bush the other night? I did. I see that Rush Limbaugh did as well. Limbaugh has phrased it as, "You Democrats had 60 years to try it your way. Now we're going to try it our way." Is that worth doing? I say yes, as I will explain below. But let's be clear: it's going to cost a lot of money. We are going to have to exercise power to make this happen. Exercising power means spending money. It does not mean balancing the budget, reducing spending, or any other thing.

We will get smaller government when people want it. No one alive today in the U.S. has ever seen small government. It sounds scary. Democrats, and their allies in the media, make sure it sounds scary. Grandmothers will be tossed in the street. Poor people will die of starvation. What a cold, cruel world these Republicans envision. People will only support a party of small government when they are sure that that stuff won't happen. And the only way to make them sure is to demonstrate it. Paradoxically, because of our history since FDR, the only way to demonstrate it now is to spend a bunch of money to create a demonstration.

Picture New Orleans 2.0, the shining city in a bowl. It's a kind of town we have a lot of in the United States. Many people of modest means, but they own their own homes. Or at least it says they do on their mortgage. Someday the mortgage will be paid off and they really will own their own homes. They will be land owners. For sure their children will be. Think about that. Think about how different that is. They care about this place. They care about their homes. They care about their neighborhoods. They care whether their politicians are crooked. It's no one else's responsibility to keep things up. This is their place. They own it.

So we do this our way, and yes, we spend some money – a fortune, frankly – to get it off the ground. Know what we'll have when we're done? People who want smaller government. Homeowners. With jobs. Why will they want big government? They won't. And that's how we win. But we can't get there unless we make it happen; unless we exercise power; unless we spend money. We have to demonstrate to people that our ideas work.

We know where to get the money. It's a Good Thing to get the money, because doing so weakens the Chinese and allows us to take care of survival in the face of some other people who are just as scary. And instead of sitting here quietly waiting for the next Democratic administration to come in and click the ratchet one more notch to the left, we can reverse some of the harm they've caused, and demonstrate that our ideas are better. This really does all play together. And it really is "conservative" in the strongest sense of the word. It's just not the same old short-term thinking, like we're used to from our politicians. It's not "small ball." It's playing to win, as opposed to playing not to lose.

Except that GWB seems to have an uncanny ability to pick routes that, in general, ARE WHAT WE WANT! Sure, it seems bad now--but look at the long run. Don't be so deadset against the idea that we must PLAY THE GAME to WIN the game. They've had it Their way for 60 years--we aren't going to get it our way in 3. We have to use their tools against them. Call it subterfuge, schadenfreude, whatever you want, but realize that in the end, it is OUR vision that the Fed is putting in place, not THEIRS. THEY have continually used the Fed to institute, as you put it, a socialist redistribution scheme. So now, we use their scheme to DEFEAT them--REMOVE the gov't dependency at its root, from the ground up.

I look at the Gulf Coast as that opportunity--rebuilding it from the ground up the way WE want things to run. But that ain't free. Now, if it is a perpetual giving scheme, where the Gulf Coast is dependent on the Fed from here till "the sun burns out," you have a point. But that is not what is happening...

"but a better solution would be to cut most of the federal gas tax"

How likely do you think that would be to happen were the Left in charge here, or were the Fed not making up for the loss in tax revenue? That is precisely what I am talking about--relax the tax on gas, and never reinstate it. The money used to rebuild will dry up, but the gas tax might never return! How about the fact that Bush has already relaxed environmental standards? Something we KNOW to be correct, but that would never have happened were it not for the Fed stepping up and taking a leading role here.

This is a golden opportunity to get things just as we want them, but we must spend some "gold" to get it!

Between the amount paid by my four businesses, and my personal taxes, last year, I could have bought a used Citation. I now spend over $3000 a week for gasoline, alone... and I don't have a plane! I contribute to road taxes, real estate taxes, personal taxes, income taxes, and excise taxes. I pay taxes on taxes.

One of these days, I'm going to sell out, and buy an island,and start my own gubmnt. Then, I'll appoint an ambassador to the UN, and get some World Bank development money to build a resort... Hmmm, I may be onto something there! Hmmmmmmm......

So, since it's happened, let's just lay down and die. Not fight. Not try to take it back. Good plan...

Hmmm, using immediate Fed response to relax or eliminate the programs that the Left has entrenched in the last 60 years is a bad idea... Having the Fed take a (temporarily) stronger role by, say, redefining who qualifies for welfare or gov't housing, something that, given its entrenched nature, WOULD NOT HAVE HAPPENED with the Left or in any other circumstance, is bad... Again, it's myopic to assume that the fact that the Fed is spending ALOT *right now* means it will never stop, and that the powers it takes *right now* are in the long run detrimental. I see this as opening doors--sure, the Fed is taking power...AWAY from the Left and their socialist ideals.

Poor state response = Fed steps in and gets the states to be more proactive. In the end, the States win as we have better plans and don't NEED to rely on the Fed later on.

Welfare/public housing = we know that it is perpetuated by the Left and their socialist programs, but the VICTIMS don't know that. So now the Fed can retool the whole system to REMOVE the dependency. People can use public assisstance for what it was originally intended--to get a hand up. With Fed $$$ comes Fed rules, so the State can no longer give the $$$ to Leftist programs to waste--it must be spent how WE want it spent.

I could go on and on. NONE of it would happen, however, if not for a TEMPORARY increase in Federal power. The Left wants it, so let's give'em what they want--FOR NOW; let's use their ideals AGAINST them. They will LOSE in the end, however. We have to play the game, b/c, as the article pointed out, the only way people will GET a smaller gov't is if they WANT it. The only way they will WANT it is if we show them how well it works. The only way we can show them how well it works is by DEFEATING the oppostion--namely, the Big Gov't and socialist programs side. The only way we can DEFEAT them is to PLAY THEIR GAME.

You have said how its spent, by electing people to represent you.

This is a doorway--the only way to cross to the other side is to play their game; but, once on the other side, WE make the rules. Yes, WE. Fine, it's your money, but under THEIR rules, YOU have no say in the matter. Now that we have the opportunity, their very ability to determine how YOU spend your money is diminished! They can't spend your money on social programs if the social programs DON'T EXIST. How can we get rid of the social programs if not this way? Realistically? How likely do you think it would be that Bush could retool social programs in the country if not thru Federal enforcement? It started on the Federal level, and must END on the Federal level--use the Fed against itself. Use the money and time to build programs that don't require or NEED Federal help. THEY have been rebuilding it in the reverse all along--rebuilding to ENSURE that the Fed is needed. Now, we have the opportunity to rebuild to destroy the "need" for the Fed! I think that is far more preferable than pissing and moaning about "encroachment on states' rights" and "MY money" nonsense. This is THE opportunity, and it MUST be seized! Play the game THEIR WAY, AGAINST THEM! How can the Left object to more Federal spending when that is all that they have pushed for for 60 years? They will LOSE, both in policy and with the public. Suddenly, the Left is the one calling for less spending--THEY become the ones that hate the poor, THEY become the ones that hate women. Then WE get to rebuild it the way WE want it...

I could go on and on. NONE of it would happen, however, if not for a TEMPORARY increase in Federal power. The Left wants it, so let's give'em what they want--FOR NOW; let's use their ideals AGAINST them. They will LOSE in the end, however. We have to play the game, b/c, as the article pointed out, the only way people will GET a smaller gov't is if they WANT it. The only way they will WANT it is if we show them how well it works. The only way we can show them how well it works is by DEFEATING the oppostion--namely, the Big Gov't and socialist programs side. The only way we can DEFEAT them is to PLAY THEIR GAME.

Translation: "If you can't beat 'em, join 'em." Yes, people need to want smaller government. So why not make the case? Why not try convincing people that big government is a bad thing? Articles like this only make it more difficult to do that.

"You have said how its spent, by electing people to represent you."

No, I elected people to leave me the he-(double l) alone.

Other people elected representatives to take my money and give it to them.

All your doing is just dreaming up better ways for the thief that just stole my money to squander it.

There is nothing outside of national defense, international trade, and interstate trade that the federal government can do better than the people.

You sound like a drug pusher. I'm not buying.

Except that as far as I can see Bush ISN'T spending all of that money and putting us deeper into debt to build alternative social programs that will begin to wean people off of government assistance. In fact, all I've seen is more 'the government will take care of it'. The federal governemnt will take care of your security, the federal government will make sure your kids are educated, the federal government will bail you out after a storm, the federal government will take care of you in your old age, the federal government will fund every little project in every little town. Where are these programs you seem to think they're spending all of this money on that will fix this? All I've seen is the federal government taking more and more responsibilty for taking care of things and making sure everyone has 'everything they need' and spending us into oblivion in the process.

Convince them how? "We are going to take away this program on which you've relied for 40 years to show you how you can do it on your own." Yeah, great plan. That'll fly as well as a brick. How about we say, "Here, here's what you need to get back on your feet. Now that you are back on your feet, use these resources to STAY on your feet, as this program has a life of 6 months." Then, when the time's up, the program ends and they are still standing. DEMONSTRATE how it will work, don't just make wholesome promises--platitudes don't pay the bills. SHOW them how they don't need to rely on the Gov't forever.

We have no better opportunity to institute the "ownership society" than right now. How can the guy that makes $5.15 enter the ownership society if he can't even pay his rent (based on the gov't handout mindset)? We SHOW him how, by helping him TEMPORARILY, OUR way.

Making trite little comments like "why not try convincing people that big government is a bad thing" does no good, as to him, it ISN'T a bad thing. Maybe even use this as an opportunity to SHOW him what gov't dependency means, so he will try even HARDER to get out from under it. But if he has no REASON to try, why SHOULD he? Under *their* system, he keeps getting handouts. Under our system, he gets a hand up and then he is on his own, like the rest of us.

But how can we institute the best way (i.e. the Conservative way) if we don't play their game? People, in general, are not well-educated nor informed, nor do they like to think for themselves, which is why Liberalism is such a fit for so many of them. We must use that tool to our advantage, and play it their way. People have been brainwashed into thinking that the Fed has all the answers, and will, therefore, RUN from any attempt to diminish Fed influence. We have to play the game their way while subtly changing the rules that, eventually, will lead to the demise of the idea that the Fed has all the answers.

But again, we cannot accomplish it the way we've been trying. We've been trying to point out that big gov't is bad for 225+ years, and look what its gotten us: NEA (Arts and Education), HUD, welfare, SocSec, etc. So how about playing it THEIR way for a change, and using their programs against them? Use their ideals to defeat their ideals.

"You must become the beast to defeat the beast" rings particularly true to me in this respect. In "Silence of the Lambs" we are shown how you have to think like a psycopath to catch one. So why shouldn't we have to think and play like a socialist to defeat a socialist? It has to be on THEIR level, since they have had it their way for 60 years...

Right--who are those who elected people to take your money? And how do you suppose we remedy that?

Spouting tired mantras about "smaller gov't" are worthless if you have no way of PROVING that you are right. And, in this system, the only way to PROVE you are right is by playing according to the rules set before you--you must ADAPT. Since *they* are in charge, and have been for 60 years, we must play by their rules, which includes Federal power. Once we have firmly established the programs the way we want them, however, they will meet their demise. For 60 years, *they* have been building programs that are self-sustaining, and thus they cement the idea that the programs are a necessity. If we, however, seize this opportunity, we can rebuild the programs to actually work, and to put themselves out of business. Since the programs are already in place, we must play by their rules with regards to money; but, we can make our own rules as to what is DONE with that money. The programs will disappear once they are run OUR way, as people will no longer "need" them--the participants will be self-sustaining, not the programs.

This is the realm in which we are operating, so we must adapt accordingly. Proselytizing about the joys of a small gov't are empty to the guy who makes $5.15 and can't pay his rent--the programs he is relying on now are tooled in a way that he will have to keep relying on them. If we re-tool them, so the program is still "there for him," but with modified requirements, he will not "need" the program for long, and will experience the independence we know all are capable of. BUT NONE OF IT HAPPENS WITHOUT THE PROGRAM.

I can't say it enough--use the game against them. We should stop being a participant in the game and WIN the game. They have been in control too long--its time to use the game against them!

The Corporations have never been stronger since they were declared persons in Santa Clara v. Southern Pacific. Well, they weren't actually declared persons, but they have been treated as such ever since. Corporations, our gift to the world, made us what we are--the one power on earth beside which there are no others. Dubya knows that. Watch the list of candidates for '08 to see if any of them are actually wanting to rein in the corporations. So far it doesn't seem so, so we will have to choose on secondary issues. If you have something that works, leave it be. Don't get too caught up in the Enron scandal, it should have no effect even though Enron was heavily into pro-corporate NGOs. Don't buy the reductio ad Hitleram fallacy.

"Since we now have the opportunity, it will (hopefully) be a 23% consumption tax..."

Well, count me as one of those silly pessimistic types then.

We have a POTUS spending money faster than Marion Barry in a DC crack house..... we "PUBS" supposedly own all three branches of goobermint now...and the Pubs can't manage to trim meaningful fat and pork in the budget (see related thread pertaining to the spending addict Denny Hastert on FR now). We have a POTUS going against 70+% of the will of the American people and basically ignoring his base in regards to his disastrous border security policies (25+% INCREASE in illegals SINCE 911).

The Pubs couldn't find a better way to destroy their base even if Hitlery gave them the script to follow.....yea, now Karl Rove wants to push the La RAZA candidate for the supreme court...I mean... REALLY.....
C'MON!

ok, I got a headache now...
you go finish cleaning the lenses on those rose colored glasses amigo.

Ciao

So six months is the magic number? How do you justify that? Aren't you still taking away a program on which they've relied for 40 years? If people have been living off the labor of others for 40 years, do you honestly believe you can change their worldview in 6 months?

How can the guy that makes $5.15 enter the ownership society if he can't even pay his rent (based on the gov't handout mindset)? We SHOW him how, by helping him TEMPORARILY, OUR way.

What you are essentially saying is that people can't make it without government. You and the socialists both believe that government is the answer. You also have no regard for the Constitution or the concept of limited government.

Good post. I actually agree. If you can't beat them, join them. Until a majority of the nation wants less spending, its not gonna happen.

Nearly everyone on FR is for small federal government, and I am too. But that is not gonna happen for years even with a steady conservative agenda. We do have to limit the expansion of federal rights at the expense of states rights, but the Feds can spend plenty without expanding their reach.

Regardless of who spends the money, it goes right into the economy and drives it. I hope eventually we owe China trillions of dollars. Then we can tell them to suck eggs or we won't repay a dime of it. Other nations have done exactly the same to us for years. Turnabout is fair play. Besides limiting their expenditures, it gives us great leverage.

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