3 Things You Have to Know About the Bogus 'Fiscal Cliff'
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We do not judge companies by the size of their debt. We judge them by what the debt is for. If they have borrowed for an expansion or for a new venture that is likely to pay off, that debt is fine. If they have borrowed for something that will never pay … to build buggies in the expectation that this automobile thing is a passing fad … then no matter how small their debt is, it’s a problem.
A government’s business is the entire national economy. The goal of government, then, is to increase the pool of taxpayers and to increase their ability to pay. If a government borrows in order to spend in ways that will grow that economy, that’s fine. Provided that said growth will be sufficient to pay off the loans that created the growth. Just like with a business.
If there is an economic crisis, and the government borrows to save banks from collapsing (though they may not deserve that rescue as a moral proposition), to keep major industries alive (hopefully so they will then function successfully on their own), to employ people (so there is a base of customers for all businesses to sell to), to create, maintain and improve infrastructure (a sound investment because it becomes an invisible subsidy to all businesses), that is a sound investment. It will pay off because it makes the downturn shorter and the upswing stronger.
There’s your scorecard. At least for the main events.
If Tony Soprano’s Escalade goes over the cliff, carrying George Bush’s tax cuts, and bursts into flames in the best Hollywood stunt tradition, give a cheer.
If Obama’s Social Security tax cuts get dropped, it will cost you a bit more, but you can feel better about the integrity of the system. Which is important.
If the abrupt and arbitrary spending cuts go into effect, that’s bad. Seriously bad. It wipes out jobs. It hurts people. It slows the economy. It’s a replay of 1937.
More important than knowing when to applaud or to cry, these are the positions you should be pressuring your senators and representatives to take. What you should be writing letters to the editor about. Calling in on talk radio. Raising your voices, any way you can. We are not just spectators. We’re players inside this drama.