Weekly Column - 01/26/2011

This week's column comes early:

"Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t." – President Barack Obama

Attempts to draw parallels can sometimes be more instructive when the comparison is inapt. For while cash-strapped families must reduce expenditures to make a budget, the government merely has to raise the debt ceiling and have the chairmen of the Federal Reserve fire up his printing press. The federal government is not constrained by budgets, and will never be, so long as it has recourse to an endless supply of cash.

It’s true that the government, like the American family, must borrow at interest to meet its budget. It’s also true that these interest rates will climb as the American government goes deeper and deeper into debt. But the comparison ends there. An American who falls into debt may declare bankruptcy—though certain debts, such as students loans, can never be escaped. He thereupon incurs all that bankruptcy entails. To avoid this, he must pay back all that he owes. Congress, meanwhile has no intention of ever paying off its debt; its members know that they will not be held responsible for the decisions of previous Congresses. And the bankruptcy of the nation is certainly of no concern to the congresscritters. So the orgy of spending continues.