Back in the mid-1980’s, when I was too young to realized just how odd a situation I was in, my boss at the advertising agency where I worked tapped me to help him find a buyer for his failing business. My task was to lock myself in the Conference Room and make initial phone contacts with a list of potential buyers that we had agreed might be suitable. If anyone showed an interest, I was empowered to share a portion of our dismal financials in preparation for arranging a face-to-face meeting with my boss, which concluded my involvement with this exceedingly peculiar enterprise.
One executive, after getting a look at our cash flow statement called me back with a polite and simple message: No thanks. When I pressed him for a reason, his response was direct and to the point: “Burning through cash is never a path to success.”
I was reminded of this conversation when I read the details of the $1.7 trillion Omnibus federal budget that Congress passed just before Christmas. Comprising 4,155 pages (6,825 pages if you include the legislative earmarks) that legislators were supposed to read, digest, and vote upon in just a few short hours in order to avoid a partial government shutdown, it is a monument to fiscal irresponsibility and profligate government spending. Over ten years, this bill will, all on its own, add another $2.65 trillion to the deficit, forgo any further restraint on whatever is magically deemed to be “emergency” spending, and fuel yet more inflation with even higher levels of federal borrowing and spending.
Although a few Americans will be thrilled and proud to learn that this monstrosity funds a chauffeured limousine for the head of the Internal Revenue Service, everyone else can look forward to more wasteful government spending, the guarantee of higher taxes in the future, and the likelihood that a stupendous fiscal train wreck is soon to be heading our way.
It is hard for the average American to fathom the apparent unconcern with which our federal government has spent decades wasting money we don’t actually have on things we don’t really need, yet what is perhaps more concerning is that no one seems to care any longer.
The recent horror of the insane assassination of our economic well being during the equally insane Covid-19 shutdowns and lockdowns, combined with the even more insane follow-on federal spending meant to salve our self-inflicted wounds, should have alerted every American that our government is itself insane, but apparently a sufficient number of American voters are equally unconcerned with today’s bizarre fInancial stewardship, which consists solely of spending money without any apparent concern for the future.
Counseling fiscal caution is completely out of fashion with our spendthrift and silly politicians today, and the bipartisanship of the Omnibus federal debt bomb is just one more telling indication that no one who is writing the budget in Washington, D.C. believes voters will punish them for their profligacy.
I hate to say it, but they are, sad to say, entirely correct. Given the recklessness with which money is now conjured or borrowed by the U.S. Treasury and the lack of electoral accountability that manifests in bulletproof incumbency throughout America, it is easy enough for our leaders to spend today and ask no questions about the consequences for tomorrow. Whether out of ignorance, apathy, or avarice, many Americans don’t seem to mind having their votes purchased with the gusher of cash that has papered over the mismanagement and mania that has increasingly characterized our nation’s economy over the past 30 years as central planning has gradually replaced private enterprise.
Moreover, the purchasing of elected officials with campaign contributions by wealthy individuals, interest groups, unions, and corporations—all of whom are seeking either unwarranted riches or equally unwarranted control over our economic system—has so thoroughly warped the normal market mechanisms of our formerly capitalist economy that to withdraw the cash supports and tax incentives that now prop up the whole rickety structure, which is built on staggering debts and ridiculous pipe dreams, might lead to a second Great Depression crashing down upon us.
Consequently, the federal government, and to a lesser extent some State Governments, keep pumping borrowed cash into the system. The unprecedented growth in the nation’s money supply over the past several years has fueled a forty year high in price inflation that the Federal Reserve is now trying to combat by raising interest rates, but the root cause of rising prices—the outrageous levels of government spending and debt growth—is still going strong. Anyone who has ever tried to fight a fire while someone else is pouring gasoline on it will attest to both its futility and stupidity.
There is no possibility of any of this ending well. We can expect either a soul crushing economic calamity, yet more price inflation, or both will be the end game of the Enron-style accounting that has been the norm in our nation for far too long. Just as we saw the supposed wealth of the FTX cryptocurrency scam implode only recently, many American businesses that have subsisted on their talents for promising investors profits that never materialize—before convincing government officials to prop up their failures with more and more lovely government money—are due for a rude and overdue awakening in the very near future. Ponzi schemes always collapse in the end.
As was said to me roughly 35 years ago, “Burning through cash is never a path to success.” This was true back then when our federal debt amounted to roughly $2.1 trillion. It is even more true today when our federal debt has metastasized to staggering $31.5 trillion—and counting. We are at the endpoint of many decades of budgetary madness, and what will come next is anyone’s guess.