Beg, Borrow or Steal
One of my favorite things to watch over and over on DVD is “Band of Brothers,” the HBO miniseries about Easy Company, 506th PIR, 101st Airborne Division, in World War II. My favorite episode of the series, “Crossroads,” shows the period between Operation Market Garden, the airborne assault on Holland, and the siege at Bastogne. Late in the episode, as the 101st dutifully marches into Bastogne, the First Battalion staff explain to Regimental Commander Colonel Sink that he has little ammunition and few supplies.
Lieutenant Nixon: Sir, we’re a little short on Ammunition.
Colonel Sink: How short?
Captain Winters: There was a limited supply in camp, sir.
Colonel Sink: Cap’n, you beg, borrow or steal ammo, but you defend this area!
The question of precisely how accurate was that exchange between officers is a debate for historians. However, as I re-watched the episode, I realized how well that phrase that describes how government spends money.
When governments spend money, they must “beg, borrow or steal.” They beg by cutting funding to other programs. Think of it as “begging pardon” for breaking a promise elsewhere. They borrow by issuing debt such as treasury bonds. Finally, government “steals” when it taxes, forcibly taking money from citizens and resident workers.
That’s what our Congress and President are planning on doing as they try to pass the “Economic Stimulus” bill. The $825 billion the House approved won’t come out of thin air. It must be begged, borrowed or stolen. Right now, President Obama is trying to beg 10% of the military budget (and almost certainly parts of the budget of other hated-by-liberals government departments). Meanwhile, Congress will borrow much of the rest, and the sunsetting of the “Bush Tax Cuts” and possible increases in the Capital Gains tax means more stealing is almost certainly on the way.
Essentially, in order for the government to spend money, it must first take that money from somewhere else. At present, the House “Stimulus” Bill spends $825 billion (the largest spending bill in the history of the world). The Senate bill is already projected at $890 billion, though opposition Republicans might get some of that in the form of tax cuts.
So where does this huge amount of money (in addition to the roughly $3.1 trillion the government is already spending in its FY2009 budget) come from?
Very simply, it comes from the economy. It’s money that would otherwise be used to provide capital to businesses, home buyers or students needing loans. Money that would be invested on Wall Street or in the Chicago Exchange. Money that could be upgrading the computers at your office at work. Money that could be used to grow a business and create jobs. Money that could finance a family farm. Money that could be developing new technologies.
“But, that’s what this money will do!” say the Beltway insiders. “Government will spend the money and create five million new jobs!“
Well, don’t that beat all? Five million new jobs! Ya’ don’t say!
According to the Federal Reserve, average family incomes in the United States in 2004 were about $71,000. That’s the average family. So by that measure, $825 billion is roughly equivalent to the income of 11,600,000 average families. Yes, that’s right. Eleven million. Families. Even if we account for the increase in family incomes between 2004 and 2009, that’s still roughly the income of ten million average families.
In other words the Federal Government plans to create five million jobs using the resources that the private sector would use to create enough jobs for ten million American families.
It would seem that begging, borrowing and stealing is a losing proposition. Now, not all of the jobs would be American. Much of the money is being borrowed from foreign investors looking for stability in Treasury Bills, so some of this money would have undoubtedly supplied jobs to Chinese, Indian, European, Canadian and Mexican workers. Still, much of it would have been spent here, and those employed elsewhere would have used their income, partially, to buy services and goods from American companies, or would have invested part of their savings in American business.
Instead, because the government has begged, borrowed or stolen money from those that could most effectively use it there is less money to help sustain and grow American (and international) businesses. Much like doctors who used to bleed their patients to release “bad vapors,” the governments the world-over have bled our economy. Unfortunately, like bleeding, government “borrow and spend” programs almost always make the situation worse, not better.