Posts tagged with: spending

Blog author: johnteevan
Monday, October 7, 2013
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Photo Credit: Alan Cleaver via Compfight cc

Photo Credit: Alan Cleaver via Compfight cc

This first appeared in my newsletter, Economic Prospect, in late 2008. Looking back after five years I still like it.

The American failure to save is matched by our insistence on spending to have it all. One part of the problem is the consumer’s love of debt. The other part is the government’s love of debt. Both love debt to enjoy things now and to put off the day of reckoning. How did we get so far from the idea of being content with having enough food, clothing, and shelter?

  1. This is a complex issue based at first in ‘scarcity’ which leads people to create products to fill real needs. When these products are produced people have jobs and can afford more products. Say’s Law says that production creates its own demand.
  2. There comes a point where we move beyond some invisible line and marketing takes over to create imagined needs in people. These needs are filled by more products creating more jobs. This happened after WW2 and made us very prosperous.
  3. Then there is a third stage when the credit industry takes over and tries to convince people to borrow not just for houses or cars (durables) but for anything to enhance their way of life. This started in the 1970s. Consumer debt is $2 trillion but this kind of borrowing creates still more jobs at least for as long as the party lasts.

But the day of reckoning has arrived. Will we get the point and change our behavior? Apparently not. First, the government sold bonds, then raided the trust funds (Social Security), then we borrow to stimulate the economy…then we just borrow without limit.

If Americans are not saving, who will loan us all this money? The answer is the Chinese and Asians who are amazing savers. They will loan us the money. China already owns nearly $2 trillion in U.S. government bonds. This is not a small issue.

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In today’s culture, there is always an abundance of news stories about the “War on Christmas.” In my commentary this week, I address that concern and the lack of understanding of the deeper meaning of Christmas. Here’s a highlight:

Every December cultural warriors mourn the incessant attacks on Christmas and secularism’s rise in society. News headlines carry stories of modern day Herods banning nativity scenes, religious performances, and even the word “Christmas.” Just as a majority of young people profess they will have less prosperity and opportunity than their parents, many people now expect less out of Christmas. Continual bickering over holiday messaging in corporate advertising itself points to a shrinking and limited Christmas.

Yet these problems are signs on the way to important truths, if we have the eyes to see. Record spending and debt, whether in Washington or the home, allude to a society trying to fill an emptiness of the heart. Even our disappointment in poor leadership in America reminds us that we crave a true King and are expectant of a greater day.

In 2010, I penned a related essay “Why the Nativity?” That post delves even deeper into the theology of the incarnation and the celebration of the birth of Christ.

Christmas is a hard time for many people because expectations for joy and changes in their life are so high. In my own life, I count myself among those that have had a difficult time at Christmas because I’m so reflective and I realize life isn’t always how I want it.

There is a sign in front of the church that I attend that reads, “Jesus is all you want, if Jesus is all you have.” I find that the more I deeply ponder the incarnation of Christ, the more I am amazed and my heart is transformed.

I quoted Charles Wesley in my commentary in where he called Christ the “desire of every nation,” and “joy of every longing heart.” The hymn is of course, “Come Thou Long Expected Jesus.” The words are beautiful and I’ve always loved Wesley’s hymns because they deal with the deepest hopes of the heart and he personalizes the person of Christ for all.

One of the main points of the “What Would Jesus Cut?” campaign is the pitting of defense spending against charitable social programs. The assumption is that Jesus would obviously endorse and campaign for the welfare state over the military. A common perception of the U.S. armed forces by many of the religious left is that they are the perfect embodiment of America as “corrupt empire.”

At Acton, all of our commentators on the budget have consistently said all spending measures must be on the table for addressing the federal deficit and debt, including defense. But entitlement promises and their mismanagement is by far the biggest obstacle towards a plan for fiscal responsibility.

Previously, in “Shane Claiborne’s Budget Babbling,” I pointed out the absurdity of Claiborne quoting Martin Luther King’s maxim: “A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.” Does Claiborne not see entitlements as social spending, which is by far the largest expenditure?

In his column, I think Claiborne is frankly disrespectful to our military, viewing them solely as bomb hurlers and keepers of arsenals of death. He says, “cutting $3 mosquito nets that can save lives while continuing to spend $200,000 a minute on the military should raise some flags of a different sort.”

In his disrespect for the military, Claiborne makes no mention of all the humanitarian aid and assistance provided by the U.S. armed forces. One could make an argument that the military does not need to be involved in humanitarian aid, but weighed against the things Claiborne says should not be cut, the military towers over those efforts when it comes to humanitarian assistance and aid. Often, the military is vital for not just logistically delivering all the aid but helping to secure a troubled nation so aid is delivered efficiently, humanely, and in a fair manner.

The United States military has recently led humanitarian missions in Haiti after the earthquake, the Republic of Georgia, the Philippines, Indonesia, and no doubt stand ready to deliver food and medical assistance to Libya. Those nations are only a few examples of some of the humanitarian benefits of our military might. The Navy has ships that serve as floating hospitals for people in need of evacuation for medical care. In fact, their secondary mission is supporting humanitarian relief, one such example is the USNS Comfort. The Comfort deployed to Haiti after the earthquake in 2010.

My point here is I think the religious left has for too long stereotyped our armed forces and its mission. While they should be applauded at times for raising awareness of issues of peace and justice, it needs to be done responsibly and with greater respect to those who serve.

The military, after all, is under the authority of the civilian government. Shane Claiborne’s bumper sticker theology where he toasts “all who would rather see ice cream dropped from planes rather than bombs,” and proposes that the military hold bake sales so the men and women will be able to wear the uniform of our armed forces is demeaning. It cheapens the men and women who have not only shown courage in defense of our nation but compassion.

Today’s NYT has an op-ed by David Brooks that’s been getting good cyber-circulation, “The Gospel of Wealth.” Brooks highlights in particular Southern Baptist pastor David Platt, who is touted as the youngest mega-church leader in the country. Rebelling in many ways from the new traditions associated with mega-churches, Brooks says Platt inhabits the nexus between “between good and plenty, God and mammon,” spirituality and materiality, and that Platt “is in the tradition of those who don’t believe these two spheres can be reconciled.”

Here’s what Brooks concludes: “Americans will not renounce the moral materialism at the core of their national identity. But the country is clearly redefining what sort of lifestyle is socially and morally acceptable and what is not. People like Platt are central to that process.”

It’s true that the call to follow Jesus is a radical call. But it is false to juxtapose that radicalism with a demarcation between those areas of life in which one can be faithful to him and not.

What we can really hope for is that each of us will be obedient to Christ in our own callings, whether in plenty or in want, in abundance or scarcity. In the realm of economics, for most people that will mean that they act responsibly with their money, avoiding the temptation to live in the midst of crippling debt and seeking meaning in buying and identity with what we purchase and consume. This is what I’ve called the “fourth” pillar of the new economy, “Spend all you can.”

But as Brooks points out, the pursuit of sustainable wealth and profit in the midst of responsible giving and saving isn’t at all a new idea. It’s only the excessive spending and unsustainable consumption of recent decades that make it seem new.

In my commentary this week, “America’s Uncontrolled Debt and Spending is the Real ‘Waterloo,’” I offer the well known point that debt and spending threatens our liberty and prosperity. It is becoming very evident that it will be up to citizens to demand accountability from their lawmakers, as I mentioned. What has been tried before has not worked.

In terms of liberty, Thomas Jefferson declared, “The natural progress of things is for liberty to yield and government to gain ground.” What the Founders articulated was that democracy and liberty is not the natural order of things, and that consolidated power moves toward tyranny. The U.S. power structure has borrowed from the income of future generations in an irresponsible and immoral manner, and citizens are culpable as well. What does that mean? I thought U.S. Senator Judd Gregg (R-N.H.) recently articulated the consequences of the crisis very passionately on CNN with journalist John King.

The WSJ reports, to the relief of the White House and Capitol Hill, no doubt: “U.S. retail sales increased in May, rising double the rate expected in a sign consumers were using stimulus payments and that the economy might not be as weak as feared.” Whether or not this is really evidence of the “success” of the government stimulus package, you can be sure that it will be proclaimed as such from on high over the next days and weeks.

We can have a good debate about the best place to send your charitable dollars (and the Samaritan Guide is a great place to start that conversation), but at least here’s an example of someone who didn’t run right out and buy an air conditioner or a flat-panel HDTV.

(Marc, it looks like the government’s fears may have been misplaced. You can finally rest easy.)

Blog author: jballor
Friday, April 11, 2008
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Late last month I argued that recipients of the federal government’s stimulus package “should use this rebate money as they see fit, since they are the ones most familiar with their own situations and their own needs. Consider giving part of the money to charity or saving, paying off debt or investing.” Now other voices are giving similar advice, recommending saving rather than spending.

Rick Haglund, a Michigan business columnist for the Grand Rapids Press, notes that “Some saving measures can go a little too far, though. I recently heard a personal financial consultant say people can save by no longer buying that cup of coffee and newspaper on the way to work.”

“Give up the coffee, but please, please keep buying the paper. The newspaper business is in a terrible financial state,” he writes. Haglund thinks that newspapers are more important to the country than coffee…a debatable proposition. Coffee, not oil, might well be the lifeblood of American enterprise.

But the economic status of newspaper publishing is in a strange place. I’ve been getting the weekend paper for a year or so, and when I renewed I received a call from the paper just to tell me that I’d be getting the rest of the week for free (a good thing too, or I would have missed Haglund’s column).

It reminded me of getting a postcard in the mail from the government telling me to expect a rebate…no notice necessary, just send the free stuff and the money. I don’t think it cost the Grand Rapids Press millions of dollars to make the phone calls, though (it cost the feds $42 million to mail out those inane little rebate notices).

In any case, it makes more sense for many newspapers to give their issues away to get a boost in circulation numbers than it does to count on the income from subscriptions. I also recently saw one of the narrowest daily newspapers I had ever seen last weekend, part of the trend to cut printing costs. (I can’t complain too much, though, since the Port Huron Times Herald has published more than one of my commentaries. Keep up the good work!)

Of course, some folks, like Betty J. Mazur, are going to do just what the government wants them to do with the money. “I’m going to buy new clothing with my check,” she said. (The piece linked above is in part about how it is necessary to file federal taxes for 2007 in order to get the 2008 rebate. Marketplace discusses that, and also debunks some myths about the rebate, here.)

Oh, and don’t forget to blame conservative theology for the credit crisis. After all, it seems as if adherents to so-called “conservative” theology don’t save as much as they ought.

How any decent sociologist could have this reaction is beyond me: “Keister was surprised that when demographic factors — such as education, age and race — were held as constant, religion still proved to be an influential factor in wealth accumulation” (emphasis added).

Amazing, just amazing. Can you dare admit that religious beliefs really do influence behavior?

Keister says a typical “conservative Protestant” might be a member of the Assemblies of God, Churches of Christ, Nazarene and Pentecostal churches. I guess they’ve forgotten what John Wesley said.

Blog author: jballor
Tuesday, April 1, 2008
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Last week the Providence Journal ran a piece by me on the forthcoming “rebate” checks from the government intended to be an economic stimulus, “The mandate is to ‘spend all you can’.” I take issue with the idea that the government gives us money that is our own in the first place, and then tells us how we ought to spend it: on consumables and retail goods to spur growth in the economy.

Instead, I propose that people “should use this rebate money as they see fit, since they are the ones most familiar with their own situations and their own needs. Consider giving part of the money to charity or saving, paying off debt or investing. And if it makes sense for you and your situation, you should feel free to buy that hi-def TV if you so desire.”

“But you certainly should not feel obligated to do so as if mere consumption is a civic responsibility,” I add.

The real problem with the package is that it perpetuates a view of the government’s role in the economy as the final arbiter of how markets ought to work and what people should be doing with their money. No doubt this is in part a response to the idea that the federal government in general, and the president in particular, has a primary formative influence on the shape and health of the nation’s economy.

Alasdair MacIntyre puts it this way,

Government insists more and more that its civil servants themselves have the kind of education that will qualify them as experts. It more and more recruits those who claim to be experts into its civil service…. Government itself becomes a hierarchy of bureaucratic managers, and the major justification advanced for the intervention of government in society is the contention that government has resources of competence which most citizens do not possess.

Thus comes the idea that the president is a kind of “economist in chief,” who directs the nation’s and the world’s markets by executive decree (compare that idea with the presidential job description given by the Concerned Women for America here).

Update: It’s 3 am…and this time the crisis is economic…


Of course, if we’re really concerned about someone answering a phone in a crisis, maybe we should elect a Wonder Pet:

Blog author: jarmstrong
Wednesday, May 23, 2007
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Both of our major political parties have missed what seems so obvious. One says that we need more tax cuts to strengthen the economy. This is correct. The problem is that they are not willing to also make serious budget cuts. That party has spent more than any previous administration. The other political party wants to expand federal government by spending more of our money by raising taxes. The first plan helps the economy in the short run but not in the long term. The second is an even worse disaster I think.

Look, budget deficits are not a good thing, at least not in my simplistic understanding of economics. What individual would decrease their revenue, at least for the short term, and then also increase spending, for the long term? I know, cutting tax rates generates more money in the long run and thus the government benefits. I agree with that proven principle. Ronald Reagan advanced it and to the astonishment of all his enemies it worked.

What I do not think is a proven fact is that you can keep raising government spending, so as to increase deficits, and not someday have to "pay the piper." The late Milton Friedman, a hero of mine, continually noted that the burden of government is best measured by the level of our spending, not by the level of our tax rates. John Stossel pointed this out very clearly in his syndicated column that appeared in my paper today.

Here is the bad news. Your FICA and Social Security taxes currently exceed the expenditures of these programs. But by 2017 or 2018 this will all change when the baby boomers start to retire in massive numbers and begin to drain the system. Stossel gives President Bush some credit for the falling deficit because of his tax cuts. This plan has shrunk the deficit, at least to some extent. Cutting taxes and cutting deficits are not opposites. Both can and should be done. There is enough blame to go around in Washington. I want to decrease tax rates even further but I also want to seriously decrease federal spending.

John Stossel notes that the anti-Federalist writer Melancton Smith (1787) wrote: "All governments find a use for as much money as they can raise." That is the real issue and few will admit it, whether Republicans or Democrats. One party generally does a better job with this issue than the other but the difference is more one of degree than of deep and true principle, or so it seems to this amateur. I am open to seeing this differently but I think the obvious is pretty obvious. We need to grow the economy, allow people to keep their own money so they can spend it and create new jobs, and limit the role of government in solving every social ill we face. I believe there are some pressing issues that demand federal solutions. I am not a libertarian Luddite. But I also believe that at some point we had better face this deficit issue and slow spending or we will soon face financial and social chaos like we have never imagined.

John H. Armstrong is founder and director of ACT 3, a ministry aimed at "encouraging the church, through its leadership, to pursue doctrinal and ethical reformation and to foster spiritual awakening."

There can be little doubt that one of the greatest political and economic problems in the US is the way that our Congress “earmarks” billions of dollars for special projects that benefit lawmakers in their bid for personal security and re-election.

The system works in a very straightforward way. Congress can pass massive spending bills and all the while representatives can add “earmarks” that benefit projects and people in their district or state. It is a form, quite often, of legal payback for favors rendered to the elected official. President Bush asked Congress, in his last State of the Union address, to give him a line-item veto. Don’t expect it to happen soon. The idea makes perfect sense really, and it has been done in several states, so why am I so pessimistic about the prospects? The simple answer is plain to see—both parties have found that it pays to spend money in this less accountable way. Incumbents use it to gain favor and to stay in power. Everyone knows that over 95% of the incumbents in the US House are re-elected every two years. Why fix a system that benefits those who are being asked to fix it? Supposedly smaller-government Republicans should favor this idea but many are just as adept at this “earmark” business as the most liberal Democrats.

All the recent talk we’ve heard about reforming the system is really not very impressive when you look at what really happens in Washington. But there have always been a few leaders who have risen above this type of spending and shown themselves to be consistent in their service of the common good of all the people. Michael Reagan recently told the story of how a wealthy businessman in California came to see his late father one day when he was running his first campaign for governor in the 1960s. The man left a paper bag with $40,000 on Reagan’s desk saying, “This is for you.” Reagan took the bag and threw it at his friend and walked out of the room. Later Reagan told this man that if he wanted to make a contribution to his campaign he should send the gift to his campaign committee. And he warned his friend to never try this stunt again, telling him that if he were elected governor the man should never expect to get a single favor from Reagan.

One could wish for more people like Ronald Reagan in public leadership. I think we call this integrity. The lack of such integrity is frankly harming all of us. Everyone knows that this growing practice of budget “earmarks” is called “pork.” Frankly, calling it pork is a disgrace to pigs, who have higher standards that many of those who spend public money to secure their spot in Congress. In a very real sense I call it “legalized bribery.” I pray for the day when the public has had enough of this and pressures Congress to clean up this mess. Changing parties in the last election cycle will not likely change the culture in Washington. We need something much bigger and stronger to do that. I would suggest that what we really need is leadership with courage and vision.

John H. Armstrong is founder and director of ACT 3, a ministry aimed at "encouraging the church, through its leadership, to pursue doctrinal and ethical reformation and to foster spiritual awakening."