The recently retired always seem to have the biggest axe to grind. Take Jack Lew, for instance. He started off the New Year by sharpening his axe on the grinding wheel of the GOP tax bill. On Tuesday, he told Bloomberg Radio that the new tax bill will explode the debt and leave people sick and starving.
“It’s a ticking time bomb in terms of the debt.
“The next shoe to drop is going to be an attack on the most vulnerable in our society. How are we going to pay for the deficit caused by the tax cut? We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security. One could not have made up a more cynical strategy.”
The tax bill, without question, is an impractical disaster. However, that doesn’t mean it’s abnormal. The Trump administration is merely doing what every other administration has done for the last 40 years or more. They’re running a deficit as we march onward towards default.
We don’t like it. We don’t agree with it. But how we’re going to pay for it shouldn’t be a mystery to Lew. We’re going to pay for it the same way we’ve paid for every other deficit: with more debt.
A Job Well Done
Of all people, Jack Lew should know this. If you recall, Lew was the United States Secretary of Treasury during former President Obama’s second term in office. Four consecutive years of deficits – totaling over $2 trillion – were notched on his watch.
Did he ever mention the debt ticking time bomb when he had the opportunity to do something about it? We don’t remember ever hearing this debt bomb allusion from Lew while he was Treasury Secretary. Do you?
We do remember, however, that as part of his job he had to place his autograph on the face of the Federal Reserve’s legal tender notes. Did it ever occur to Lew that, in so doing, he was publically endorsing and personally ratifying unconstitutional money with his very signature?
Most likely, it never crossed his mind. And if it had, the illegality of the paper dollar certainly didn’t bother him enough to prompt his resignation and the pursuit of honest employment. He did none of these things.
Instead, Lew played his part to perfection. That is, he rolled over year after year in his quest for the expedient. He did the job everyone wanted him to do. He did a job well done.
Likewise, now that he’s off the clock he’s sounding the alarm on the nation’s debt problem. According to Lew, it’s all Trump’s fault. Not his.
As an aside, we don’t necessarily take issue with Lew’s assessment of the tax bill and ticking time bomb metaphor. What we take issue with is the timing of his two faced utterances.
Why You Should Embrace the Twilight of the Debt Bubble Age
In truth, no one really cares about deficits and debt. Not former Treasury Secretary Jack Lew. Not current Treasury Secretary Steven Mnuchin. Not Trump. Not Obama. Not your congressional representative. Not Dick Cheney.
Plain and simple, unless there are political points to score like Lew was aiming for this week, no one gives a doggone hoot about the debt problem. That’s a problem for tomorrow. Not today.
Quite frankly, everyone loves government debt – DOW 25,000! Aging baby boomers know they need massive amounts of government debt to pay their social security, medicare, and disability checks. On top of that, many employed workers are really on corporate welfare. They’re dependent upon the benevolence of government contracts to provide their daily bread.
What’s more, in this crazy debt based fiat money system, the debt must perpetually increase or the whole financial system breaks down. Specifically, more debt is always needed to keep asset prices inflated and the wealth mirage visible.
By providing a quick burst to the rate of debt increase, President Trump expects to get a quick burst to the rate of GDP growth. We suspect President Trump and his followers will be underwhelmed by what effect, if any, the tax cuts have on the economy. Time will tell.
In the meantime, don’t fret about government deficits and debt. The political leaders may say deficits don’t matter. But they do matter. In fact, soon they’ll matter a lot.
We’re in the twilight of the debt bubble age. Embrace it. Love it. What choice do you have, really? There’s nothing Jack Lew – or anyone else – can do about it.
for Economic Prism