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September 21st, 2017

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A vast sea of debt

Paul Greenberg

By Paul Greenberg

Published Sept.22, 2015

 A vast sea of debt

You won't find it on any map; it probably wouldn't fit. But the Wall Street Journal's staff has done its best to trace the outlines of presidential candidate Bernie Sanders' spending plans. Which isn't easy. Because this sea of debt is not just big but huge, immense, and no sea of tranquility, either. It's full of turbulent wave after wave of mounting debt. It includes proposals for a government-run health-care program ($15 trillion over the next decade); plans to build new highways, bridges and roads, and rebuild old ones; a vast expansion of Social Security, and free tuition at every public college. And that's just for starters.

The costliest proposal may be the one to extend Medicare, now a program for older Americans, to everybody in the country. Naturally taxes would rise, though scarcely enough to cover the costs of all Sen. Sanders' extravagant plans. There would be increases in the capital-gains tax, in the estate tax (aka the death tax) and a fee on financial transactions, with investment firms taxed on every stock they buy or sell.

You can well imagine what all that would do for -- or rather to -- the American economy: Paralyze it. Or as William Cobbett, the English pamphleteer with a sharp eye and social conscience, noted a couple of centuries ago: "Nothing is so well calculated to produce a death-like torpor in the country as an extended system of taxation and a great national debt."

Yes, there are times when a government's going into debt, even deep in debt, is warranted, even more than warranted, as when fighting a great war or the Great Depression. All policies must be judged in context. It was our first and far-seeing secretary of the treasury, Alexander Hamilton, who noted that a national debt can be a national treasure if it unites the interests of investors with that of the country -- as his visionary economic program did in the early years of this republic.

But just to throw good money after bad by launching or expanding all these wasteful projects Bernie Sanders has in mind ... is beyond irresponsible. It's madness. Just look at the federal government's record for waste and mismanagement. Solyndra, anyone? Or any of its dozens of other failed "green" investments. How about the Environmental Protection Agency's latest disaster -- the Gold King Mine spill? If that's protecting the environment, what would ruining it be? Or the Veterans Health Administration, which can lose not just money but patients.

The total federal debt when our current president took office (January 21, 2009) stood at some $10.6 trillion, now exceeds $18.1 trillion, and when Barack Obama's presidential term ends may well exceed $20 trillion. That increase in the national debt over his eight years in office would come close if not exceed all the national debt accumulated under all the other 43 presidents combined. That's not just a sea of debt but an ocean, and it's lapping all around us.

Now along comes Bernie Sanders to assure us, "One of the demands of my campaign is that we think big." Especially about super-sizing the national debt. The senator calls himself a Democratic socialist, and the problem with socialism, as Margaret Thatcher is said to have observed, is that "you eventually run out of other people's money."

Under the senator's plan, total federal spending would rise by a third to about $68 trillion over the next decade. For years, total federal spending has hovered at about 20 percent of the Gross Domestic Product, but Bernie Sanders, the big spender from little Vermont, would increase it to 30 percent of GDP in the first year of his plan. All in all, it would add up to a greater increase in government spending than the entire New Deal or LBJ's Great Society -- surpassed only by the wartime spending needed to win the Second World War.

He's no piker, this Bernie Sanders, at least not with your money, or rather your credit, Mr. and Mrs. Taxpayer.

The senator's chief rival for the Democratic presidential nomination, Hillary Clinton, will doubtless continue this bidding war for the party's base, and produce her own plans to run up federal spending, which even now amounts to some $650 billion over the next decade and counting.

But who's counting? Just say "Charge It!" Just put it on the never-never, which is what the Brits used to call buying on the installment plan. It's not as if this were real money, just projections. And all these estimates may prove underestimates if government programs do what they usually do: multiply.

To quote Ludwig von Mises, who noted this trend as early as the 1920s or so, and from it derived "a general law that, whenever the government intervened in the economy to solve a problem, it invariably ended, not in solving the original problem, but also in creating one or two others, each of which then seemed to cry out for further government intervention." Until, much like Bernie Sanders' spending plans, there was no end to it.

As that noted economist Bette Davis commented when she played Margo Channing in "All About Eve," "Fasten your seat belts, it's going to be a bumpy night!"

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Paul Greenberg is the Pulitzer-winning editorial page editor of the Arkansas Democrat-Gazette.

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