Dear Friends,
It seems to me, the real debate, the one we should be having about the sequester is, what pressing need is there for government to grow at more than twice the rate of inflation… or is there one? Baseline budgeting, the kind that the US government uses, has a built in raise of 4% per year. The BLS claims CPI inflation is running at a modest 1-2% per year. Since the baseline is 4% then government has built in growth at twice the rate of inflation. If we further take the mandate of the FED, that they manage the money supply so that inflation runs at 2% per year, then we can see that government is designed to grow at double the rate of inflation ad infinitem. The long term trend of this policy is that government will eventually consume the entire non government GDP of the US. The only people who could consider this a good thing are communists and socialists since total government control of the economy is their goal.
Is there a national need for government to grow at this rate? Government spending is considered part of GDP. As government grows, GDP appears to grow, due to the increase in government spending. Since government is slated to grow at twice the rate of inflation, as it is targeted by the Federal Reserve, GDP growth is boosted, regardless of the fundamental underlying economic conditions. This allows the Elite to mask their policies that have a negative effect on the economy. The growth in government spending makes GDP growth appear to be higher than it really is. Is that a valid reason?
What will be the eventual result of such rapid expansion of government spending? The growth of government spending necessarially lowers the amount of money that people and businesses can spend. 70% of the US economy is consumer spending, consumer demand is necessarially lowered as government taxing and spending goes up, therefore the economy will experience stagnation. This, it seems obvious, will eventually destroy the market system in the US, and people’s perception of it. The destruction of which will bring government spending back to zero, no one to tax means government must either stop it’s own spending, borrow to keep it up or convert to a communist economy. If government stops spending the economy that has become totally dependent on government largess, will collapse, if government borrows to maintain spending, it must borrow from other nation’s stores of capital, without any way to raise funds to pay them back. This is a situation that is the definition of unsustainable.
Why then is it, that the Elite claim reigning in government growth to the rate of inflation, as the sequester does, is so detrimental to the economy? Unless government is hiring more workers and taking on more responsibilities growth in government beyond the rate of inflation is unnecessary. The additional growth, beyond the rate of inflation, cannot be needed to continue existing government programs, (unless the wages they are paying are growing in access of the rate of inflation driving down real wages among working people)… so why is there a need for the executive to shut down critical operations of government? Presumably the budget last year was sufficient to pay for such services? Unless the cuts themselves are nothing more then a crass political maneuver to keep the rate of government growth exceeding inflation, or they seek to mask the results of their policies on the economy, by increasing government spending.
The lack of real debate about the issue, leaves us with only two possibilities, either the BLS is lying about the rate of inflation, or, the Elite in the government and in the unbiased media, want to progress government spending and thus power, to become total in nature and extent, thus placing all economic activity under the control of the political Elite… distributive justice by political favor. Neither possibility is flattering for the Elite. History has many examples of socialist regimes, the outcome of that philosophy of government is empirically proven… economic stagnation, oppression and violence by government against politically disfavored groups. Under the policy of growing government at twice the rate of inflation, socialism and/or communism is the only possible outcome, with all the attendant problems associated with it. The moment someone claims, “this time will be different,” they are showing themselves to be not only ignorant, but stupid as well. It is like claiming that this time when I throw the ball into the air, it will not fall back to the ground but will go into orbit… experience shows the absurdity of the statement. If the BLS is lying, the honchos in that department should be prosecuted, and if the political Elite stupidly seek a totalitarian state, then they are usurpers to the Constitution. Their very own rhetoric and actions belie their unsuitability for government service, and we suffer them to hold office, to our eventual oppression.
Sincerely,
John Pepin
