Trillion Dollar Interest?
THIS IS WHERE WE’RE HEADED …
We think the recommendations produced by the so-called National Commission on Fiscal Responsibility and Reform (a.k.a. the “Simpson-Bowles” commission) were pretty weak. We’re not saying the cuts this group recommended shouldn’t have been adopted (they should have) but revenue enhancements are not our cup of tea.
Nor are they the economy’s cup of tea …
Having said that, commission co-chairman Erskine Bowles made a good point recently regarding the skyrocketing interest that American taxpayers’ are being forced to pay on government’s skyrocketing debt.
“We’ll be spending over $1 trillion a year on interest by 2020,” Bowles said at a recent forum, arguing this money would be better spent on public education or infrastructure. “What makes it doubly bad is that trillion will be spent principally in Asia, because that’s where our debt is,” he added.
Obviously we disagree with Bowles regarding the need for additional funding for government-run schools. We might as well set those dollars on fire, people. And while we believe a case can be made for government building and maintaining infrastructure, the process currently in place is wasteful and inherently corrupt – leading to billions of dollars in unnecessary expenses each year.
And don’t get us started on government’s mismanagement of infrastructure …
From our vantage point, a much better way of looking at this $1 trillion is to think of it as money that could have been pumped back into the American free market in the form of tax relief – preferably income tax cuts. Of course with “Republicans” joining Democrats on the tax-and-spend bandwagon that’s clearly never going to happen.
What is going to happen? More spending. More debt … and higher interest payments that choke off future economic growth. All in the name of “recovery.”