BY RUSSELL TURNER
CONSEQUENCES OF DEBT
Being in business I know something about the pitfalls that happen in any business. Any business sooner or later will experience unexpected expenses; it can range from storm damage, or just simple mechanical failure. When these things happen it often becomes necessary to borrow money and repair the damage in order to keep the business operating. A prudent businessman will go into debt, but the repayment of that debt is the first order of business. The businessman understands that until the debt is paid off it is a potential threat to the survivability of his firm. The same can be said about a nation and the way it conducts its economy. Typically a country will have a budget and provide for the needs of the people; in the event of a war or natural disaster funds will be borrowed for a short period of time then, after the war or disaster, an attempt will be made to pay the debt down. At one time that is the way the United States did business, you can look at past budgets and see how debt was increasing before and during WW1 and WW2 then the debt was paid down after the war. Today that is not happening,
It amazes me how unconcerned most Americans are when it comes to our nation’s finances. The US government’s ‘Fiscal Year’ runs from October 1st through September 30th. During the fiscal year of 2017 our government-collected revenue exceeded $3 trillion. When you look at the numbers that is an astronomical sum of money, it exceeds the combined GDPs of the poorest 130 countries in the world. But the US government managed to spend WAY more than that-- the budget for the last fiscal year was $4.1 trillion. In the just-completed fiscal year we saw no major recession. No full-scale war. No financial crisis or bank bailout. What’s going to happen to these numbers when there actually is a major war to fund? Or major recession? Or banking crisis? Our government has been spending like this for decades without any regard for the long-term consequences. The Roman Empire and other great powers showed a tendency to spend themselves into decline, ignoring the consequences along the way.
The US government spends nearly the ENTIRETY of its tax revenue on Social Security, Medicare, Defense and Interest on the Debt. This idea of consequence-free spending has got us into a hole that is nearly impossible to get out of. Congress could literally cut almost everything we think of as ‘government’ and they’d still lose hundreds of billions of dollars each year. The government simply spends too much money on programs it cannot afford.
We have too many politicians who incite class envy to divert attention from the real problem. They will suggest making the rich pay their fair share and make corporations pay more. The fact of the matter—which even leftist economists understand, though they might not publicly admit it—is corporations do not pay taxes. If a tax is levied on a corporation, it will have one of four responses or some combination thereof. It will raise the price of its product, lower dividends, cut salaries, or lay off workers. In each case, a flesh-and-blood person bears the tax burden. Corporations are merely tax collectors for the government. We Americans need to learn a simple fact, there are serious consequences to over spending and additional taxes. Too often we are led to believe if we are not being taxed and someone else is paying the bills everything is just fine; but eventually it will affect us also.
CONSEQUENCES OF DEBT
Being in business I know something about the pitfalls that happen in any business. Any business sooner or later will experience unexpected expenses; it can range from storm damage, or just simple mechanical failure. When these things happen it often becomes necessary to borrow money and repair the damage in order to keep the business operating. A prudent businessman will go into debt, but the repayment of that debt is the first order of business. The businessman understands that until the debt is paid off it is a potential threat to the survivability of his firm. The same can be said about a nation and the way it conducts its economy. Typically a country will have a budget and provide for the needs of the people; in the event of a war or natural disaster funds will be borrowed for a short period of time then, after the war or disaster, an attempt will be made to pay the debt down. At one time that is the way the United States did business, you can look at past budgets and see how debt was increasing before and during WW1 and WW2 then the debt was paid down after the war. Today that is not happening,
It amazes me how unconcerned most Americans are when it comes to our nation’s finances. The US government’s ‘Fiscal Year’ runs from October 1st through September 30th. During the fiscal year of 2017 our government-collected revenue exceeded $3 trillion. When you look at the numbers that is an astronomical sum of money, it exceeds the combined GDPs of the poorest 130 countries in the world. But the US government managed to spend WAY more than that-- the budget for the last fiscal year was $4.1 trillion. In the just-completed fiscal year we saw no major recession. No full-scale war. No financial crisis or bank bailout. What’s going to happen to these numbers when there actually is a major war to fund? Or major recession? Or banking crisis? Our government has been spending like this for decades without any regard for the long-term consequences. The Roman Empire and other great powers showed a tendency to spend themselves into decline, ignoring the consequences along the way.
The US government spends nearly the ENTIRETY of its tax revenue on Social Security, Medicare, Defense and Interest on the Debt. This idea of consequence-free spending has got us into a hole that is nearly impossible to get out of. Congress could literally cut almost everything we think of as ‘government’ and they’d still lose hundreds of billions of dollars each year. The government simply spends too much money on programs it cannot afford.
We have too many politicians who incite class envy to divert attention from the real problem. They will suggest making the rich pay their fair share and make corporations pay more. The fact of the matter—which even leftist economists understand, though they might not publicly admit it—is corporations do not pay taxes. If a tax is levied on a corporation, it will have one of four responses or some combination thereof. It will raise the price of its product, lower dividends, cut salaries, or lay off workers. In each case, a flesh-and-blood person bears the tax burden. Corporations are merely tax collectors for the government. We Americans need to learn a simple fact, there are serious consequences to over spending and additional taxes. Too often we are led to believe if we are not being taxed and someone else is paying the bills everything is just fine; but eventually it will affect us also.
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