Robbing The Unborn

Oleg Volk
March 25th, 2009

"Government usually get money three ways. The simplest and most traditional is taxation. Taxes are not popular and the amount available is limited by the resources of the taxpayers. Raising taxes is usually political suicide. Inflating the money supply or “printing new bills” is equally unpopular. It robs everyone of their savings and makes a currency worthless in short order. Hyper-inflation is also political suicide. The last option is deficit spending.

Deficit spending for an individual is borrowing money with a promise of repayment. Depending on the credit rating, a person may have to put up collateral against the loan or enjoy the benefit of a good reputation and future financial prospects. Intelligent deficit spending buys an education. Wanton spending buys a large TV. Either way, the person who benefits is the person who eventually repays.

Government spending is a little different. They borrow money against collateral. That collateral is mostly future tax revenues, your labor. However, borrowing against your future labor isn't enough. They borrow against the future taxes imposed on your children and on their children. Politically, it is safe. Your grandkids yet unborn can't vote. By the time they are old enough to comprehend the magnitude of debts made in their names, the politicians who authorized the spending will be long gone.

Your grandkids might not even realize that their labor and property were put up as collateral by some long-gone Congress. We don't often think of paying off spending sprees of past governments, but we are on the hook for that money also. Yet even a person ignorant of the details of the arrangement would feel the iron heel of the tax collectors.

Government debt must be sold: that's where they get the cash for operating. The buyers believe that some future government would pay them back. That belief is usually founded on the perceived ability of the tax collectors to squeeze the populace for increased taxes rates. They can't count on rising revenues from expanding tax base because an economy already regularly raped of its investment capital cannot expand.

Government deficit spending puts your kids in debt before they can even vote. It puts your grandkids in debt before they are even born. Those who spend their inheritance promise to pay it back someday by squeezing the future taxpayers. Today, all taxes combined average about 50% of our incomes. Your kids would have to cough up even more, getting fewer services and suffering more brutal tax collection. No wonder most government officials support gun control! It's hard to convince creditors that an armed population can be squeezed dry at payback time."