I recall the days when President Reagan was elected and the Republicans were going to bring smaller government, less spending, and debt reduction to the nation after years of “big spending Democrats”. History records it did not work out so well. Seems Reagan pulled a con on the small government conservatives.
In 1992, Murray Rothbard wrote:
In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of one trillion dollars. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles. The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan a chance to bring about a balanced budget and to begin to reduce the debt. Many of these Republicans tearfully announced that they were taking this fateful step because they deeply trusted their President, who would not let them down.
Famous last words. In a sense, the Reagan handlers were right: there were no more tears, no more complaints, because the principles themselves were quickly forgotten, swept into the dustbin of history. Deficits and the public debt have piled up mountainously since then, and few people care, least of all conservative Republicans. …
We are now down the road of time several more decades and we find that the one trillion dollar debt ceiling of 1980 is a quaint idea from a time long past. It would be just great if all the nation owed was one trillion dollars! In the age of Obama we can give a mere Trillion dollars to Wall Street in a year.The national debt according to the government now stands at approximately 16 Trillion dollars. This is about $51,000 for every person living in the US. A very detailed look at these figures can be seen here.
Many experts claim that the total debt plus future obligations is the only way to look at the debt since that is exactly how private business and individuals have to look at their debt. The total debt including future obligations is controversial and difficult to peg exactly but conservative estimates put it in the range of 60 to 100 trillion dollars. On the other hand, the National Center for Policy Analysis put the true figure at 217 dollars and that was before the Obama care health package was ruled constitutional.
What can we possibly do to correct the problem of massive debt and interest on the debt? Can the problem be corrected? Can the USA even pay off its debts? How would that happen and what effects would that medicine bring with it?
The route of turning on the printing presses (this is metaphor as we create new money electronically these days) has been followed by many nations down through history and one can judge the outcomes by reading about the conditions in those countries. The Wikipedia article on hyperinflation is here. The most famous is the Wiemar Republic of Germany in the ’30s. Hyper-inflation is judged by most men as a horrific, chaotic path to follow. I tend to agree with that judgement.
President Obama is following the hyperinflation route by printing money without any restraint, but if hyperinflation were to be rejected as a strategy, then that only leaves debt repudiation.
Under the debt repudiation scenario the nation would repudiate the debt and pay for budgets as it collected taxes. The US would have to pay for all current expenditures without borrowing since it would not be able to borrow money for decades to come. This would mean the end of the world wide brutal military empire; a good thing in my view. In fact, the nation would have to scale its operations back on an enormous scale to if borrowing and inflation were not available to fund its needs. Perhaps whole departments would have to be cut; like the Department of Homeland Security for example.
There is one more way the debt could be handled. States could leave the nation as nations left the old USSR when it was failing. Fifty small nations, each determining their own way in the world is an answer worth looking at. There is no way that what is best for the people of Montana is the same as what is best for the people of Hawaii. Perhaps secession is an idea whose time has come around again.