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Obama and Government Fiscal Irresponsibility


On Monday, February 23rd, President Obama will be hosting a “fiscal responsibility summit” with the publicly declared purpose of reining in the growing cost of government, especially the projected unfunded liabilities for Social Security and Medicare in the years and decades to come.

However, as I explain in a new piece I’ve written on “Obama and Fiscal Irresponsibility,” undoubtedly there will be the usual smoke and mirrors that leave the fundamental issues untouched: Should government be in the retirement and health care business? How, instead, do we return to a free society in which individuals are responsible for planning for their own retirement years and managing their own medical expenses in a truly free market economy?

None of this will be on Obama’s agenda at this summit meeting, because as the president emphasized in his inaugural address on January 20th, he doesn’t want to discuss whether government is “too big” or “too small.” He has already made up his mind: government is responsible for providing jobs, health care, and pensions for all Americans. He only wants to sort out how to do that more comprehensively in the future and figure out where the money will come from to fund this governmental largess.

The only way this financial straightjacket will ever be lifted from the shoulders of the American citizen/taxpayers will be through a rejection of the premises and policies of the interventionist/welfare state.

A starting point for this revolution in ideology and ideas will be the repudiation of the “entitlement” mentality and its presumption that government is to be considered a giant redistributive transfer machine to rob Peter to pay Paul.

Along with this must be the disavowal of this dangerous notion of a “social contract” that that says that since the government has promised these redistributive benefits to multitudes of people there is no turning back. “Why, we can’t have the government ‘break its promise,’ can we?”

This “promise” is based upon the coercive legalized plunder that Frederic Bastiat so eloquently explained and warned against in the middle of the 19th century. A “promise” that relies upon a thief continuing to rob some to “give” to others, is immoral and dangerous to the character and functioning of any type of healthy and free society.

Ludwig von Mises also discussed this, in 1930, in an address that he gave before the Vienna Industrial Club:

“Whenever there is any talk about decreasing public expenditures, the advocates of this spending policy voice their objection, saying that most of the existing expenditures, as well as the increases in expenditures, are inevitable. Any notion of applying the concept of austerity to the machinery of the public sector is to be rejected. What exactly does ‘inevitable’ mean in this context? That the expenditures are based on various laws that have been passed in the past is not an objection if the argument for eliminating these laws is based on their damaging effects on the economy. The metaphorical use of the term ‘inevitable’ is nothing but a haven in which to hide in the face of an inability to comprehend the seriousness of our situation. People do not want to accept the fact that the public budget has to be radically reduced.”

Putting our heads in the sand will not make these fiscal burdens and their harmful effects on freedom and prosperity go away in contemporary America, and more than was the case in the Austria of the interwar period to which Mises was referring in this address.

Richard M. Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel.

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