In Denial over the Budget Crisis

The arguments being made with regards to solving the governmental budget crisis are becoming fundamentally absurd as the situation with the federal deficit and federal debt worsens. As the deficits do not shrink and as the debt continues to grow the hysteria to deny the only three solutions gets louder.

People are actually proposing that there is no reason to balance the budget, and that paying off even a portion of the debt is bad for the economy. Perhaps there would be a short term downturn if a portion of the debt were paid off, and perhaps not, but the long term effects would only be beneficial. The argument is made citing the downturn of 1937, where an additional tax as well as additional labor regulations combined to create a recession in the middle of a depression.

Suggesting tax increases as a means to close the budget gap elicits a response that taxes aren’t raised for that purpose but instead to control inflation. This puts the paltry show of raising the taxes on top earners a few points in a new light, as it shows that the purpose had nothing to do with dealing with the fiscal cliff but was entirely and only about making the rich pay more. That it took place during fiscal cliff negotiations was showmanship, nothing else.

Those who are burying their heads in the sand are actually hoping that people making arguments about balancing the budget and paying down the debt are just posturing for political purposes, because the belief is that no person seriously believes that fiscal responsibility is a good thing.

A proposed solution is that the United States, being in control of its own currency and with the ability to print more, is unable to go bankrupt. This is presented as the grown up and mature solution, mocking those who say the budget should be balanced before there is a fiscal disaster.

The denial that the current Kenyesian order is failing is intense. And as the situation grows more dire, the arguments needed to bolster it grow more and more extreme. It can cause a person to wonder what defenses would be offered when it finally does collapse.