Weekly Address: 02/23/2013

The President is right to put the onus on Congress for the sequester, the latest iteration of the congressional penchant for rationing our money. However, IMHO, the President is wrong about the need to reduce the deficit by reducing spending. I appreciate his desire to take this opportunity to eliminate Pentagon programs we don’t need, but, while I don’t agree with Dick Cheney that “deficits don’t matter,” participating in this charade is an insult to the American people. The failure to expose the Congress as an habitual offender when it comes to its stewardship of the economy does not serve us well.

When Congress promises to write down the tax obligations of one group, they’re no different than the Unjust Steward in the biblical parable writing down what debtors owed to his master. Not collecting taxes from billionaires is the same thing. That it’s mismanagement, rather than thievery, just means it’s a firing offense.

Since the U.S. prints and distributes its own currency, it doesn’t need to collect taxes in order to spend. But, there is a good reasong for collecting revenue and bringing the dollars back to Washington. It’s necessary to keep the currency moving — a necessity that’s been steadily increasing, if the data collected by the Federal Reserve are to be believed.

As this graph shows, the transit of the dollar through our economy has gotten ever more sluggish.

velocity of dollar The only uptick since the start of the Great Recession occurred when the stimulus was in effect. Ever since, it’s been steadily downhill. Is that because the deficit and public employment have been shrinking?

President Obama is not the first Democrat to accomplish what Republicans claim to want, ignoring that what they want is a really bad idea. That’s got to stop.