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.

That's a rather myopic view...look at it through this lense and tell me that...

Better yet, call me in 20 years to see what effect its had.

It took a catastrophe like the Great Depression to lower the defenses against a big gov't, so it will take a catastrophe like Katrina/Rita to demonstrate the beauty of a smaller one. but people are used to things the way they are, so we must work within that framework...

Change will not occur within such a short amount of time, as we have to change HEARTS and MINDS, aside from policies...

NONE of it would happen, however, if not for a TEMPORARY increase in Federal power.

You really ought to try to base your plan on a more realistic premise, e.g.:

NONE of it would happen, however, if not for a TEMPORARY visitation by my fairy godmother.
NONE of it would happen, however, if not for a TEMPORARY suspension of the laws of physics.
NONE of it would happen, however, if not for a TEMPORARY loan from the pot of gold at the end of the rainbow.

You're right--platitudes about "smaller government" are a much better way to change minds... I *suggested* 6 months--that is hardly what will work, nor is it what is proposed. It is an "example"...

Nonsense, nonsense, platitude... What I am saying is that for 60 years people have been told they can't do it without the gov't, and it is, therefore, our task to play within those limits. You can spout as many mantras about socialism and limited gov't, but the fact remains that people need tangible, noticeable effects. So, how do you accomplish that? Yank the rug from under them in the name of "states rights"? No, you work within the constraints we have in order to accomplish the larger good--"you gotta give a little...take a little..."

We didn't set the rules, so we must abide by them, but we also have the opportunity to rewrite them.

You fail to get that we must work within the framework to change the framework. You have to change hearts and minds more than policy--change the hearts and minds and the policy will follow. But empty platitudes do more harm than good, as people instintively associates (remember, they are within the framework, and have been for 60 years) that "smaller government" means "you don't get any help from the government whatsoever--you are on your own." Whether that is the truth or not is irrelevant--that is what they hear. So, we must work within the framework..

Call it "viral." This idea is a virus to socialism, and, as you know, viruses work from within to destroy--they don't sit outside the body and harp about how the body should get sick...

I'm not saying that pork spending doesn't exist--don't get me wrong.

But with regards to the NOLA dn Gulf Coast rebuilding, I was originally appalled at the amount of Federal funds and involvement the Admin is talking about. But the more I think about it, spurred by this article, the more sense it makes.

I've said it 90 times today--we have no other option but to work within the framework we are given. We have to play the game to win the game. Yes, smaller government is the goal. But we can't sit on the sidelines while the Left bloats it, harping about how "smaller is better" the whole time. We have to join the game and beat them, using their own tools.

People have it in their minds, and have for 60 years, that the Fed can and should fix everything. That is a fact--we must, therefore, plan with that in mind, and use that assumption against the Left. Work within the framework we are given to CHANGE the framework...

Well when are they planning to start this 'hearts and minds' change? To date I've seen nothing of it, all I've seen is the federal government saying 'we'll take care of it'. I mean they're even looking at change the Posse Comitatus Act so that the federal government can take care of people in a disaster. How is any of this a step toward teaching people to take care of themselves and each other instead of letting the government do it? This administration has taken no steps toward that end that I can perceive.

In my opinion, if the administration wanted smaller government and wanted to show people that it worked they should have started when they came into power to limit the programs on which people depend and MAKE them choose to sink or swim and work to get the federal government OUT of peoples lives. You can't enable people and expect them to learn to stand on their own.

Right, Bush is full of crap when he talks about that "ownership society." He really means "(Federal) ownership society."

Bush has not misstepped yet, and I wouldn't think he'd start now. This is a prime opportunity to firmly cement the Conservative ideal. He'd be a fool not to take it, and only a fool can't see that...

People have it in their minds, and have for 60 years, that the Fed can and should fix everything. That is a fact--we must, therefore, plan with that in mind, and use that assumption against the Left. Work within the framework we are given to CHANGE the framework...

I'm more in the mind of "if you don't like the rules of the game change them". We don't need to work 'within the framework', we need to CHANGE the framework!!!!

Nicky, Nicky,, damn you've been bitten by a MoonBat.. pity..

You've overlooked one thing in your rambleing but entertaining screed.. Dubya just might be a globalist.. and it ALL; from being AWOL on immigration to spending like a drunken Captian Queeg on stawberries.. could have a globalist agenda.. SLAP SLAP, WAKE up Nicky... wake up..
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The one thing everyman fears is the unknown. When presented this scenario, individual rights will be willingly relinquished for the guarantee of well being granted to them by World Government. -- Henry Kissinger, Amiens, France, 1991

"We are not going to achieve a new world order without paying for it in blood as well as in words and money," warned Arthur Schlesinger Jr, in the July/August 1995 issue of Foreign Affairs.

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.

Unless Rule #1 is "Less money will be spent on this stuff this year than last year, and so on next year, and so on..." they you ain't a fiscal conservative. Period.

Clever writing, which only serves to prove "We've come a long way, Baby!".

I can't imagine George Washington writing this, saying this or even thinking it. Instead, he would be laying flat on his back in a fit of pure apoplexy.

Frankly, I think I prefer to go with the federal government George envisioned and fought for - not some slick accountant's idea of "how can we fool 'em today?".

This is a scheme Richard Ben-Veniste and Bill Clinton would be proud of thinking up - if only they had thought of it first!

Jacobin capitalism?

Again, we must work within the framework we are given. All people understand is enabling, hand-outs, etc. You can't take it all away and expect A)to remain in power and B)to accomplish your goal in the end. We must work within the system, and set up the programs anew, so people will begin to have their hearts and minds changed. Yanking the rug out will only embitter them.

It takes something like this in order for major change to happen--and since people are still in the "handout" mindset, we must work within that framework--but we can effect massive changes within that framework. With the Fed taking a larger role, Bush now has the opportunity to mold and reshape the social programs the way they OUGHT to be, not the way the Left wants them to be...

And that last line is kind of paradoxical--I'm talking about enabling people to stand on their own, not enabling them to be bums. They have to have a hand-up, often, and we should offer it. But that is far different from a handout, and I would hope you can see the difference. "Teach me to fish," not "give me a fish." The former is a hand-up, the latter the handout.

And how do we do that? "Sorry, NOLA and Gulf Coast, you're on your own! 'Smaller government,' after all!"

Yeah, that would work. And there wouldn't be another conservative elected for another 10 years, long enough for them to muck things up again.

You are denying reality if you think Bush&Co can just yank the rug out. This is the reality--these programs exists, and people rely on them like they rely on oxygen. We cannot create a vacuum here. We have to use the programs (the frameworks) to wean them off. It will seem like the Fed is going above and beyond (which, in some respects, it is), but in the long run, the Fed will be working towards its own demise by creating the "owernship society" in this area. It can prompt across-the-board changes that cause the socialist programs to DIE in the end, and people will be happy and secure with it, rather than breed hatred and bitterness by "attacking" the programs. We cannot give *Them* any fodder, so we must play within their game, but USE THE GAME AGAINST THEM.
It is VIRAL. We must be as a virus, destroying them from within. Sitting outside cursing the body is useless (or spouting useless platitudes about "smaller government").

How do we, other than working from within, change the framework, as you suggested, and still retain power, and create permanent changes? If we do it too swiftly, or to zealously, there will be enough brooding resentment to elect socialists to power again who will reinstate all the old programs, exactly as they were. If we use the present system, however, to wean the dependence on Gov't OUT of the system, WE WIN in the end.

In the cynical view, yeah. And they will be out of power, and powerless to do anything about it.

We need to enable people, not to be bums, but to provide for themselves. Again, the hand-up, not the handout. They won't NEED the gov't anymore. They would even favor less gov't, so they can conduct their business in private. And thus is the end of the handout programs. But we can't get there by yanking out the rug. We must work within the system we are given--adapt.

And I'm not the "moron" who wrote the article. I just happen to agree with him. I was, however, where you are--appalled at the Admin's drive for Federal dominance. Until I read the article and it made sense. We gotta use the system against the Left until we defeat them, since A)the system is the only one we have and B)it is the only way to have legitimacy in the eyes of the populace. Some meanine yanking out the rug will create such resentment that the socialists will be back in power quicker than we can imagine, and they will be handing-out with a vengance, to "make up" for lost time...

You fail to get that we must work within the framework to change the framework.

There isn't any evidence that this approach has worked, is working or will work in the future. As long as we assume we have to continue governing like socialists because that's what the people want, we will never see any change for the better.

You have to change hearts and minds more than policy--change the hearts and minds and the policy will follow.

I agree 100%. But saying that "we must work within the framework to change the framework" suggests just the opposite--that a change in policy is the only way to change people's hearts and minds.

You're right, there is no evidence that this will work; much like the preponderance of evidence to suggest that what we have been trying for the last 60 has worked...

People think that they want socialist government, so we must feign socialism in order to win them over. I'm talking radical revolution, not platitudes. Sure, it would be radical and revolutionary to yank the rug out--it would also be a death knell for our message. We have to play the game *their* way to beat them at it. We can't beat them in a game of tennis if they are playing golf, ya dig? The trick is in, well, the tricks--subterfuge, schadenfreude, etc. We have to make them think we are playing it their way, for their ends, whereas we are playing it their way, for our ends. We hold the cards on this, as they won't know how to combat us if we do things their way. How can you formulate an argument against someone who is saying exactly what you want them to say?

And perhaps I should clarify: I am in no way in favor of a blank check--they should cut spending elsewhere to pay for the spending here, but more deficit or influence is not bad, imo, for the reasons I have maintained. If we can cut pork from the highway bill, or elsewhere, we should do it. But we cannot just resort to the "smaller government!" call and leave it at that. We have to play the game... I see this as a way for W to, yes, expand Federal power, but I believe he is capable of doing it in a way that, in the end, the Fed ends up with less power when all is said and done, and we have the agenda accomplished to our satisfaction. The whole point is to take it from *them* and do with it as WE please, rather than let *them* continue to run the show their way (through socialism). If we do it before them, and do it *their* way, we win, as we are in control the whole time, and they can't complain (can you imagine? "You can't do that! That's the way WE would have done it!").

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