I came across a post by Ann Barnhardt on American Thinker titled We The Stupid, and thought ‘ooh this sounds interesting’. I like thinkers.
I then stepped through a portal, into the Twilight Zone. Kansas-born Colorado resident Barnhardt sincerely thinks that:
The so-called “right” or “Tea Party” in this republic is being so thoroughly rolled and defeated that I am struggling to come up with an adequate [sic] violent submission metaphor that does not involve prison rape.
Holy alternative reality batman! Needless to say, this is not a viewpoint shared by economists, bankers, business leaders, or… the rest of the world outside America.
So let’s unpack this very shrill essay of paranoid victimhood. Barnhardt displays a fundamental miscomprehension of what the debt limit actually is when she snipes that “Obama gets over $2 Trillion to spend before the 2012 election… and he has made it perfectly clear that he will spend every penny of it”.
Firstly, I’ll turn to Reagan and H.W. Bush policy adviser Bruce Bartlett who explains in the New York Times that technically, the debt limit is redundant:
the decision to run a deficit and increase national indebtedness is made by Congress when it votes to cut taxes, create entitlement programs and enact appropriations that will necessarily cause spending to be higher than revenues – not when it raises the debt limit.
Bartlett counsels that “while politicians and the general public believe that the debt limit is an important constraint on national indebtedness, not one iota of evidence supports this belief.” He cites a 1979 General Accounting Office report that states:
Before 1974, it was plausible to argue that there was some virtue in having a debt limit because it forced Congress to acknowledge the consequences of deficit spending from time to time. But that year, it enacted the Congressional Budget and Impoundment Control Act, which requires Congress to enact a budget resolution annually that specifies an appropriate level for the deficit and the debt.
Consequently, a separate vote on the debt limit is at best superfluous.
Bartlett argues that it is “nothing but grandstanding for members of both parties to vote routinely for legislation that they know will create deficits and then profess shock and horror that the debt limit must be increased as a consequence.”
As such he believes the debt limit should be abolished, especially given its newfound potency as a political weapon for extortion as currently wielded by the Tea Party, as “sooner or later the shoe will be on the other foot, as Democrats hold the debt limit hostage against a Republican president”.
Back to Barhnardt. Obama doesn’t “get” anything to spend. Congress does. But Obama is arguably a sober and responsible pair of hands compared to G.W. Bush when it comes to increases in the deficit under his watch (most of which are only temporary), as the New York Times chart below vividly demonstrates:
It was Dick Cheney who famously stated that “Reagan proved deficits don’t matter”, and it has been under Republican leadership from Reagan onwards that deficits have ballooned the quickest.
I assume Barnhardt to be a Reagan fan (if not a Bush fan), so I’m wondering where all this outrage was when the GOP had the reins over the last 30 years? It appears odd that deficits only seem to matter under Democratic leadership, and to characterize the Democratic party as the spendthrifts given the actual, you know, facts.
Barnhardt complains that the expiration of the Bush tax cuts is a (terrible) certainty on January 1, 2013, and the (more than) $1 trillion in spending cuts over ten years is “accounting fraud… and essentially meaningless relative to the size of the problem”.
As a cursory glance at the graph above or accompanying article will show, it was the Bush tax cuts and war spending that are in fact the biggest policy drivers of increased deficits, but if they expire as scheduled future deficits will be cut by half.
Ms Barnhardt also professes worry over just who is going to lend the US this $2 trillion dollars. Uh, I dunno – maybe all the people who are already funding it? And saying that “Obama is going to embezzle considerably more than the entire economic output of Canada, India or Russia to his cronies before the 2012 election”, is just a fatuous, hyperbolic, ad hominem attack – not an argument.
She worries about the Fed printing money to fund the deficit – which is a legitimate concern, but says that there is only one possible result from the resulting currency debasement: HYPERINFLATION!!! AND TOTAL ECONOMIC AND SOCIETAL COLLAPSE!!!
Well I can think of at least two other possible outcomes from the Fed’s currency debasement. The first is a ‘normal’ level of inflation of say 2%-4%, which erodes the value of America’s debt, reducing in real terms the value of the treasuries other countries own – and hence the deficit.
(America is unique in its ability to export its inflation because of two reasons. The US is holder of the world’s reserve currency, so when America prints money much of it goes outside the country, which means the money supply within America is able to stay relatively stable compared to any other country taking similarly inflationary measures. Compounding that, oil is traded in US dollars or ‘petrodollars’, which further spreads America’s inflation outside its borders).
The second outcome of inflation causing a lower dollar is that America’s exports become much cheaper, boosting the agriculture and manufacturing sectors. This is a traditional, conventional policy route that countries take after suffering a recession to improve their competitiveness, and one denied Eurozone members because of their common currency.
It’s also crucial to reducing unemployment, which is by far the more acute problem America faces right now. In fact, policies that will increase employment/growth – particularly right now, are far more important to the long term deficit because it is the trend of the ratio of debt to GDP that is significant. Increase growth and deficits will quickly recede relative to GDP.
(Incidentally, bond markets disagree with Barnhardt’s assessment of hyperinflation, predicting inflation of around 4% over the next 30 years, despite the Fed’s two rounds of quantitative easing. I trust their predictions much, much, much more than Barnhardt’s).
Then Barnhardt goes in for a full wailing and gnashing of teeth at the (by no means guaranteed) expiration of the Bush tax cuts. “Taxes will increase significantly” she shrieks!
Yeah, if they do expire, for people earning over $250,000, who make up 5% of the population, they will go up from 35% – the lowest rates in 60 years – to 39.5%. That’s salary earners; the real wealthy will face their ‘income tax’ i.e. capital gains tax, increasing from 15% to 20%. But Obama has consistently stated he wants only those tax cuts to expire, and the tax cuts affecting the middle class (those earning under $250,000) to remain.
Okaaaaaay. So America is right now taking in less revenue from taxes proportionate to GDP (around 14% of GDP) than at any time in at least the last hundred years, where it has averaged between 19% and 23% of GDP. But taxes are far too high! Look out for new taxes!
You would think that if tax cuts were the magical spur to growth and employment they’ve been claimed to be, that after thirty years of consistently lowering tax rates America would be having one hell of a party right now. That it isn’t suggests there’s more to the mix to creating growth than constantly cutting taxes.
All that said, I do strongly endorse current plans to lower marginal tax rates across the board by eliminating the loopholes, exceptions, and industry giveaways that currently mean more tax is exempt than actually collected. This will also significantly increase the tax base and massively simplify the tax code, which is currently Swiss cheese with more holes than cheese.
Barnhardt puts the finishing touches illustrating just how uncritical a thinker she is with this absolute peach of crazy:
Obama is the enemy. Obama is a Marxist-Communist usurper and puppet front for a cabal of Marxist-Communists who are actively trying to destroy the United States of America. Everything they have done, are doing, and will do has the single goal of collapsing and destroying the U.S. economy, military, constitutional government and culture. What part of “Marxist Revolution” do you not understand?
But wait, it gets better!
The Obama regime… has debased the currency by 50% of the GDP and guaranteed that our economy will collapse. It has looted the Treasury for more than the size of a top-ten economy and embezzled that wealth into the hands of their fellow Marxists in preparation for the final collapse of the United States. It has ground the economy of the United States to a screeching halt. It has destabilized the entire Muslim world and ensured that there will be a nuclear war centered around Israel within the decade.
You read that right, it’s Obama who has destabilized the entire Muslim world. And although Obama ostensibly presents himself to the public as a centrist slightly to the right of Nixon policy-wise – it’s really all a sham designed to trick us into looking the other way while this brilliant Manchurian candidate disembowels the country he lives in Mugabe-style!
Honestly, this is just too supremely silly for words. The whole post is worth reading in its entirety for a raw glimpse of the Tea Party psyche.
Ann Barnhardt describes herself as a “livestock and grain commodity broker and marketing consultant, American patriot, traditional Catholic, and unwitting counter-revolutionary blogger.”
I’m sure she’s a nice lady, kind to her family and what not, but her viewing of facts through what can only be described as a rigidly ideological filter means she gets them consistently and overwhelmingly wrong. If her essay is symptomatic of the intellectual rigor of typical Tea Partiers then America truly is in trouble given their power over the GOP.
We The Stupid indeed.
Full disclosure: I am not registered with any political party, but would describe my general political outlook as a libertarian-leaning centrist liberal, for want of a better shorthand. Comments and polite disagreements welcome!
Globalmitch 