Economics for Idiots

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Filed Under Economy on Jun 7 

Enjoy this guest post from a regular who, for employment reasons, remains anonymous.

The Republican Party is increasingly the party of ‘extremists’, a party unwilling to compromise, full of tired ideas that don’t work, and more about winning than winning for America. That is the current party line for the Democrats, for the Obama administration, and for anyone who has philosophically departed from reality and never balanced a checkbook in their lives.

First of all, it is true that the Republican Party, and the Tea Party backers, have finally said “enough is enough!” with regard to government spending. Common citizens started to pay attention to the government demands on their increasingly tight personal budgets, and demanded accountability. That is not extreme, and it is not an ideological issue, but simple math. Private citizens are tired of paying for public sector excesses while living an increasingly austere life. Additionally, private citizens are tired of unionized government employees demanding pay raises and benefits that simply don’t exist in the market of today.

In the years of strong employment numbers, a seemingly never-ending appreciation of property values, and governments that were awash with case, it was easy to argue that we would always grow our way out of debt. However wrong that idea was for long-term fiscal stability, that bubble burst in the last few years as governments at all levels have been unable to meet their obligations. Governments used future outlays (pension funds, guaranteed pay increases, etc.) to hire workers when the job market was tight, ignoring the burden that placed on their future balance sheets. Now that we are in an economic downturn, the folly of such a plan is coming back to bite them.

So now for the Economics for Idiots lesson—you cannot spend more than you make. The high school graduates out there have learned the hard way that buying a car that costs more than you make will only come back to haunt you. They have learned that a rainy day will eventually happen, that savings matters, and banks do really mean it when they say you are liable for the note in full.

Hence, the genesis of the Tea Party and the push for fiscal conservatism for our government. The accumulated debt at the federal, state, and local level is staggering. And yet, your average citizen sees zero attempts by our government to pay it back. We all understand the occasional need to take out short-term loans to meet long-term obligations, but even then you must have a plan to pay it back. Instead, the high school graduates are increasingly told by the academic elites and political class that all is well, that they need to go back to their blue-collar jobs, shut up and be happy with what the government provides. And the average citizens are not responding very well to such condescending ignorance.

Republicans have not become extreme. They are simply responding to the electorate, and maybe even a few of them are true converts to the principles of basic economics. We can argue till the cows come home about how to spend our tax dollars, how to collect and who to tax, but one of the many assumptions has to be that we will only spend what we take in. Everything else is funny math and dishonesty. Expensive dishonesty.

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