The most newsworthy debate these days isn’t between the Republicans and the Democrats, between the Tea Party Republicans and the Republican establishment, or between the progressive Democratic base and President Obama. Rather, it’s the debate between the optimists and the pessimists about America, and, internally, between the optimistic and pessimistic tendencies of individual Americans.
Sunny Sam: Well, not bad for controlling one half of one-third of the federal government. We got the Democrats to agree to trillions of dollars in spending cuts without any tax increases.
Gloomy Gus: Yeah, some deal. President Obama is going to run through the $2.1 trillion in additional borrowing in two years of spending a trillion a year more than the government takes in, with those stimulus-inflated baselines of twice the federal government’s size at the end of the Clinton administration. At $17 trillion, the federal debt will be more than 100 percent of our $15 trillion GDP. Never mind the Greece comparison; start reading up on Weimar Germany. And that’s just the accumulated debt—never mind all we owe in terms of obligations in Social Security and health care to the aging baby boomers. We’re totally insolvent.
As for the spending “cuts” in that deal, or any of these deals, they are just promises, over 10 years. And the defense cuts in there will guarantee American decline. The White House bragged the deal is “the first defense cut Since the 1990s.” Read Texas governor Rick Perry’s book about that. Perry writes that “most” of the “spending restraint” during the Gingrich-led Congress “came from not fighting President Clinton's efforts to cut military spending.” That didn’t work out too well for American defense when September 2001 rolled around.
Sunny Sam: Aw, come on. This Weimar stuff is put out by money managers and talk radio hosts with financial interests in selling gold, or in that TBT exchange traded fund that shorts Treasury bills. If people are willing to loan the American government money at near-zero interest rates, we might as well take it from them. It’s better than raising taxes. And if you’re going to talk about future obligations, you have to think about future revenue, as well. Plenty of households and companies can handle big debt loads—but they also have future earning power.
As for the defense cuts, again, come on. We can cut plenty out of the Pentagon and still have the world’s mightiest military by far.
Gloomy Gus: Oh yeah? What about the Chinese? While we’re getting ready to slash our military because we’re totally broke, the Chinese are getting ready to launch their first aircraft carrier.
And if you think it’s just gold-coin salesmen and talk radio hosts who are worried about federal spending and debt levels, what about Bill Gates and the Silicon Valley venture capitalists at Kleiner Perkins Caulfield & Byers? The Microsoft founder said last week, citing a Kleiner Perkins presentation, that “the United States is headed toward bankruptcy unless we act decisively.”
Sunny Sam: Yeah, “act decisively” is code for the tax increases some of these Silicon Valley types want so there’s still plenty of government money to subsidize their green energy investments. As for China, their per capita GDP is in the $4,400 range, while ours is in the $47,000 range. On a person for person basis, our economy is 10 times stronger than theirs. And Europe is in even deeper economic and fiscal trouble than we are, so they’re not a threat, either. America has been in bad recessions before—the 1970s, the early 1980s, the Great Depression, the post-Nasdaq Crash and post September 11 attack early 2000s—and we always seem to find our way out of them.
Gloomy Gus: Yeah, but Americans had more character and toughness then and better leaders. We’ve become a nation of lazy couch potatoes, indoctrinated by left-wing professors.
Sunny Sam: Well, don’t underestimate the American people.
Gloomy Gus: Who do you think elected the politicians who got us into this mess?
Sunny Sam: Who do you think has the power to throw them out?
Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life. This column first appeared at Reason.com.