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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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Don’t Raise the Debt Ceiling

by

It’s time for Republicans to do the right thing. It’s time to put the brakes on out-of-control federal spending. The best way to do it is by refusing to lift the debt ceiling when the current ceiling is reached a couple of months from now.

As most everyone knows, the federal government is spending some $1.3 trillion dollars more than what it is bringing in with taxes. To spend that extra money, the government borrows the money. Much of the borrowed money is sucked out of the private sector, which inhibits the growth of capital, which is what causes standards of living to rise.

The amount borrowed by the federal government is then added onto to the monumental amount of debt already owed by the federal government. That debt — currently almost $16 trillion — is a legal obligation of the federal government. When it comes due, the government either must tax the citizenry to repay it, either directly through income taxes or indirectly through inflationary debasement of the currency. Either way, the citizens are ultimately on the hook for the repayment of all that debt. Right now, each citizen’s share of the debt is over $52,000. The share for a family of four is more than $200,000.

What happens when government overspends? Well, think back to when conservatives used to brag about how Ronald Reagan brought down the Soviet Union. How did he do that, according to conservatives? By making the Soviet government spend so much money that it ultimately went bankrupt.

Why don’t conservatives bring that up anymore? Because they know that the principle of government overspending applies not just to the Soviet government — or, for that matter, to the Greek government, which suffered the same consequence — it applies to every government, including the U.S. government. In fact, it also applies to states and cities, many of whom have gone bankrupt as a consequence of too much spending and borrowing.

In fact, the debt ceiling is an acknowledgement by Congress that excessive government debt is not a good thing. If it was a good thing, there wouldn’t be a debt ceiling. The debt ceiling says: This much debt and no more.

It is clear that President Obama and other American statists have absolutely no intention of reining in federal spending and borrowing. They have made that clear, over and over again. In fact, Obama has already thrown down the gauntlet and announced that he will insist on an unconditional lifting of the debt ceiling and will not even discuss cutting federal spending.

In fact, Obama and his statist supporters, including the mainstream press, actually want to increase federal spending and borrowing. Ignoring the lessons of the Soviet Union, Greece, and states and cities that have gone bankrupt, Obama and others statists say that more federal spending and borrowing is good for “the economy.” Cutting federal spending would lead to a “recession,” they say.

What would a refusal to lift the debt ceiling mean? It would mean that the federal government would be prohibited from adding any more debt onto the total debt it already owes. That would mean that it would have live within the amount of money being collected by taxes.

So, that means that it would have to immediately eliminate 1.3 trillion dollars in expenditures — that is, the amount of money being spent in excess of what the government is receiving in taxes.

What could be more awesome than that (well, except for a total dismantling of the welfare-warfare state apparatus that statists have grafted onto our constitutional order)? Overnight, a large portion — $1.3 trillion — of the welfare-warfare state would have to be dismantled.

Statists say that that would be a economic catastrophe but that’s just economic nonsense. As I have repeatedly emphasized in the past, the public sector is the parasitic sector while the private sector is the productive sector. Dismantling a large portion of the parasitic sector would reorient many people in that sector into the private sector, thereby making them productive, rather than parasitic, citizens. Equally important, the private sector would no longer have that $1.3 trillion sucked out of it to fund the parasitic sector.

Yes, a large section of people in the parasitic sector would lose their jobs or their income and have to reorient into the private sector. But who says that people on the public dole have a right to a continuation of that dole?

Might it mean an immediate military withdrawal from Afghanistan? It might, but that would be a good thing. They’ve had enough time to kill “terrorists” there. Enough is enough.

Might it mean closing foreign military bases and bringing the troops home from places like Korea? It might, but that would be a good thing. The Cold War ended a long time ago. Why should American soldiers be used as a tripwire in the event the Korean civil war was to break out again?

Might it mean a loss of income for contractors and suppliers who serve the military? It might, but that would be a good thing. It would reorient them to the private sector, making them productive, rather than parasitic, entities.

Might it mean a reduction, or even termination, of Social Security, Medicare, Medicaid, farm subsidies, education grants, foreign aid to pro-U.S. dictatorships, or other welfare recipients? It might, but that would be a good thing because it would lessen dependency on the federal government and encourage such traits as self-reliance and independence.

Might it mean a radical downsizing of the drug war and the DEA? It might, but that would be a good thing. The drug war has ruined enough lives and done enough harm as it is. It’s time to end it anyway.

It’s clear that nothing else is going to cause U.S. officials to take the drastic measures that are needed to rein in federal spending. In fact, when the last debt ceiling was lifted a couple of years ago, did U.S. officials and their statist supporters do anything to rein in federal spending? Did they say, “Well, we bought some time but now we’ve got to slash spending before we reach the new debt ceiling in 2013”?

Are you kidding? It was the exact opposite. After scaring the American people with all sorts of catastrophic thoughts of what would happen if the debt ceiling wasn’t lifted, U.S. officials and their statist supporters, including those in the mainstream press, laughed it up about how they had, once again, gotten the debt ceiling lifted. And for the past two years, they have gone on a spending and borrowing spree that shows no signs of abating, just like the Soviet and Greek governments did before going bankrupt.

In fact, look at the so-called fiscal-cliff deal entered into a couple of days ago. It enables federal spending to continue soaring. And even if the deal hadn’t been reached, federal spending would have continued to rise, albeit at a lower rate of increase than federal officials had hoped for.

Refusing to lift the debt ceiling would be the best thing Republicans could ever do for the American people. It’s the best chance there is for radically slashing federal expenditures and, at the same time, dismantling a large portion of the federal welfare-warfare state.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.