In today’s world, satisfying clients, customers, and colleagues can be remarkably challenging. They are often quick to highlight flaws in others while ignoring their own shortcomings.
Recently retired public figures seem particularly vocal, and one such example is Jack Lew. Kicking off the New Year, he took his grievances to the GOP tax bill, expressing serious concerns. In a conversation with Bloomberg Radio on Tuesday, he warned that the new tax legislation could exacerbate national debt and lead to dire consequences for the most vulnerable populations.
“It’s a ticking time bomb in terms of the debt,” he cautioned.
“Soon we’ll see serious repercussions attacking the most vulnerable members of our society. How will we cover the deficit created by the tax cuts? Expect proposed cuts to health insurance for low-income individuals, reductions in basic food support, and potential threats to Medicare and Social Security. One could hardly imagine a more cynical strategy.”
While it’s undeniable that the tax bill is flawed, it is not an outlier. The Trump administration is following the same path as countless administrations before it for decades: accumulating deficits as we edge closer to a financial crisis.
This situation is unwelcome and concerning, but the method of paying for our growing debt should not perplex Lew. Historically, we have financed deficits in one way: by taking on more debt.
A Job Well Done
Ironically, Jack Lew should be well aware of this process. As the United States Secretary of Treasury during President Obama’s second term, he oversaw four consecutive years of deficits totaling over $2 trillion.
Did he ever bring up the looming debt crisis during his tenure? It seems this “debt bomb” rhetoric was absent while he held his post. Did you ever hear him express such concerns?
What we do remember is that his name appeared on the Federal Reserve’s legal tender notes. Did it not occur to him that by doing so, he was endorsing an unconstitutional monetary system?
Most likely, such thoughts never crossed his mind. And if they did, the legality of paper currency failed to motivate him to resign or seek more ethical employment. He did nothing of the sort.
Instead, Lew played his role with precision, conforming year after year to political expediency. He fulfilled the expectations placed upon him—effectively and efficiently.
Now that he is no longer in office, he’s sounding the alarm about the nation’s debt crisis, conveniently placing the blame squarely on Trump. Not on himself.
While we don’t fundamentally disagree with his critique of the tax bill and its potential repercussions, we question the timing of his sharply critical remarks.
Why You Should Embrace the Twilight of the Debt Bubble Age
To be candid, few truly care about deficits and debt. Not former Treasury Secretary Jack Lew, nor current Secretary Steven Mnuchin, nor President Trump, nor President Obama. Not even your congressional representatives or former Vice President Dick Cheney.
Simply put, unless there are political gains to be had, like Lew’s recent comments aimed at scoring points, many disregard the issue. It’s often seen as a problem for another day, not today’s concern.
In truth, many actually embrace government debt—just look at the DOW at 25,000! Aging baby boomers depend heavily on government debt for Social Security, Medicare, and disability payments. Additionally, many workers find themselves on corporate welfare, relying on government contracts for their livelihoods.
Moreover, in our debt-driven fiat monetary system, the accumulation of debt must continue indefinitely to prevent a financial collapse. New debt is constantly required to sustain asset prices and maintain the illusion of wealth.
By boosting the rate of debt accumulation, President Trump hopes for a corresponding surge in GDP growth. However, we suspect that the outcomes of these tax cuts may not impress either him or his supporters. Only time will reveal the actual impact.
For now, there’s no need to worry excessively about government deficits and debt. Political leaders may say that deficits don’t matter, but in reality, they undoubtedly do. And soon, they will matter even more.
We find ourselves in the twilight of the debt bubble era, so embrace it. Accept it. What choice do you truly have? The reality is there’s little that Jack Lew—or anyone else—can do to change it.
Sincerely,
MN Gordon
for Economic Prism
Return from Why You Should Embrace the Twilight of the Debt Bubble Age to Economic Prism
