However, what he said there was a very lame talking point.
You are right the the Koch brothers co-opted the Tea Party movement, but that movement was also borne of fearmongering around the national debt. I don't know if you ever saw him, that kid with the funny sideburns that was supposedly the 'father' of the Tea Party, but he was the one trotted out to 'explain' the 'need' to balance the federal budget, erase the debt and so on.
The problem is, from a standpoint of practical economics, forcing a national government to balance its budget is, first of all, a recipe for disaster and massive suffering. We used to have that, before the New Deal. They were called panics, and basically people were thrown out of work and starved while the big-dogs on the stock exchanges sold short and got richer. The biggest panic, of course, was the Great Depression.
Taking a book from the page of Keynes, the government must be the spender of last resort. If the economy contracts, and the government does not spend through social safety nets, demand for goods and services drops precipitously, and it creates a vicious cycle of job loss - drop in demand - more job loss - greater drop in demand, and so on until you have a full-fledged depression.
As to the debt, even Cheney said it didn't matter. Or more precisely, he said the deficit didn't matter. But the deficit adds to the debt. So what can be done? Some of you have read posts I have written about getting rid of the Fed. It is a bit more complicated than that, but basically, several of the colonies, before they became the United States, printed their own fiat currency, and Lincoln financed the Civil War with 'greenbacks,' a fiat currency. They were legal tender by law, but were not backed by gold or silver, only the credibility of the U.S. government.
That, folks, is what we have now. Our currency is only worth its face value because we all agree on it. No other reason, and it is backed only by our government's 'full faith and credit.' Now, in the day of Lincoln, when the government wanted to fund something, it would issue enough greenbacks to do the job, and they would go into circulation as the government paid for the project.
That is not how it works now.
Now, when the government spends in the red, it finances that through Treasury bonds and other types of securities, a substantial number of which are owned by foreign countries. Of the $28 trillion national debt, foreign interests own a significant portion of it. These countries include China ($1.3 trillion), Japan ($1.2 trillion) and Brazil ($262 billion), the three countries that currently hold the most U.S. debt. Treasury also groups foreign holders of national debt by oil exporting nations (including Iran, Iraq, Kuwait, Ecuador, Nigeria and others, $297 billion) and Caribbean banking centers (Bermuda, Cayman Islands, and others, $293 billion). The rest of the debt is owned by US citizens either individually, or through institutional investments.
So that is what it is. The question I have always asked, and it is a rational one, is why, if the national debt is basically money we say we owe to ourselves, then why are we paying it back with interest? Would it not be better to increase the currency levels to reduce the debt, pay for projects that actually help the American people, and get rid of this concept of scarcity?
Just asking...and believe me, I do know the various responses to this position quite well. I have even been called crazy, as have others who have pointed this out. But that doesn't make the question ring any less true, or negate the actual history of what Lincoln, and before him the various American colonies did in terms of monetary and fiscal policy.
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