Those on the Right who decry government debt and wax on about the virtues of fiscal prudence are just as confused as those who would plague us with a consumption tax. Murray Rothbard describes a typical adherent to the right-wing who opposes public borrowing and has “greatly exaggerated the dangers of the public debt” and who raises “persistent alarms about imminent ‘bankruptcy.'”1
There are perennial calls for “paying down the debt” and “getting our fiscal house in order.” First, it’s interesting to note that few suggest paying off the debt entirely. This is obviously because everyone recognizes the impossibility of the government paying its debts in full. Second, there is no house. “We” didn’t run up debt, “they” did, so the pronoun “our” is inappropriate in this case, as it is whenever the government is discussed.
Still, there needn’t be such alarm over bankruptcy, since the government – as territorial hegemon – may always raise additional funds through taxation or counterfeiting. And this is the problem with paying down the debt: it may only be done through taxation or monetizing above and beyond the current levels of expropriation.
Repudiation, then, is the only alternative which removes the yoke of previous expenditure without trading it for a heavier, more onerous burden. Not only does such a repudiation relieve current interest expenses from taxpayers, doing so will, according to Rothbard, “[cast] a pall on all future government credit, so that the government could no longer so easily divert savings to government use.”2
Finally, it’s one thing for someone outside of government to suggest paying the bills and balancing the budget. It’s entirely different when politicians, that is those directly responsible for the outrageous spending, ascend a soap box and lecture everyone on fiscal responsibility. Physician, heal thyself.
1 Man, Economy, and State with Power and Market by Murray Rothbard