JASON: Got a nice, long clip from Rush on never letting a crisis go to waste and the futility of all of the stimulus spending. Remember, we had a stimulus package in 2009 that wasted money on Solyndra and A123 and all of those things that were supposed to be shovel-ready and green technology.
Let me just give you a little economics lesson here, folks. The first rule of economics is something called opportunity cost, and that’s the old guns-and-butter debate. The government operates in a zero-sum game. It creates nothing. The private sector and the ingenuity of people tinkering in their garage creates things that the government couldn’t possibly predict.
So when the government takes from Taxpayer A to give to Taxpayer B, nothing is changed in a macro sense. This is the problem with Keynesian economics, that you can spend your way into prosperity. It is a zero-sum game. If you say government spending has a multiplier effect, what does private spending have? No effect?
So every time we spend money as we’re doing now like drunken sailors — you know, as Reagan used to say, that wouldn’t be fair to drunken sailors — you are reducing spending in more productive ways in the private sector. And that’s why these things never, ever, ever work. And then all of a sudden, you create a pyramid of debt that you can’t service.
Our debt is now 102% of GDP. We haven’t seen that since 1945 and 1946. The difference then, however, is we drew down from the war. Right now, we have entitlements that are permanent and not going away. If the 10-year Treasury rate gets to its normal level, post-World War II normal level of 5.5% or 5.7% instead of 1.7%, we will have a debt service…
Just to service the debt every year will cost well over a trillion dollars. We won’t be able to do it and then you’ll have a run on the dollar and then you’ll see what poverty and recession and depression is really like. This is what we’re playing with for the next generation. We’ll have a $2.5 trillion deficit this year.
Biden and company want to add to it. “Don’t worry, interest rates are low.” They won’t stay low. Producer prices are already rising. When judgment day comes, when judgment day comes, don’t tell anybody we didn’t tell you so. Rush’s take on all of this? We got a warning from El Rushbo many, many times, but this one is especially good.
RUSH: You know, I used to ask professional golfers that, “Does it ever get boring hitting it straight every time?” They said, “Never.” “Does it ever get boring the ball going where you want it to go?” “Never.” I said, “Really?” I would never know on the golf course, but I know about this, and, folks, it never gets boring being able to predict. It gets frustrating that it always works.
So we have a tragedy. We have a down-to-earth tragedy. We have a train derailing. We’ve got people dead. We’ve got hundreds of people injured, and the first thing the Democrat Party sees is an opportunity. They want you to see, or want you to think that they are the ones that see tragedy and that have the compassion necessary to deal with it. They don’t see the tragedy.
They see the opportunity. It’s the Republicans that see the tragedy and get caught flat-footed dealing with it that way. It’s amazing. Within minutes of this train derailment you just knew the word “infrastructure” was gonna be bandied about all over the place, and it was. The word “infrastructure” was halfway around the world before anybody found out that infrastructure had nothing to do with this.
That it was a driver, an engineer, who now says he doesn’t remember, who was doing twice the choo-choo train’s speed limit at the turn. So now it’s infrastructure, infrastructure, infrastructure, and the low-information voters, what do they end up knowing? Look at the New York Times headline: “One Day After Wreck, Increased Funding for Amtrak Fails in a House Panel.” You can’t have any more purposeful bias in a news story and headline than that: “One Day After Wreck, Increased Funding for Amtrak Fails in a House Panel”?
So idiots that read the New York Times are supposed to conclude that the derailment happened because the Republicans are cheap, and don’t care about people and don’t like trains. “That’s right, the Republicans don’t like trains. I mean, that’s how it goes. That’s the line of thought. That is the message for your average Democrat Party base voter and low-information voter. But let’s review, shall we?
Let’s plug some reality into all this. The over $800 billion stimulus bill back in 2009 was an infrastructure bill (so we were told) to repair roads, bridges, schools, and all that. It turns out to be as big a lie as Obamacare. The stimulus bill wasn’t about infrastructure any more than Obamacare is about affordable health insurance.
Both the stimulus bill and Obamacare are executive fraud, pure and simple. More money has been misdirected and misspent in Obamacare and the stimulus bill than we can comprehend. But the point is, you can never fully fund fraud. You can never satisfy con men. And fraud is what we have been subjected to all too often from our government. It didn’t start with Obama, and I don’t want anybody to think that that’s what I believe.
Fraud, at the highest levels of U.S. government, has been going on for a while. It would be hard, actually, to peg when it began. Washington is where every dollar in this country goes, to then be disbursed. There’s a reason so many people want to live in Washington. If you want money, that’s where it is; that’s where it’s allocated; that’s where it’s taxed; that’s where it’s collected; that’s where it’s banked; that’s where it is spent.
So it’s just obvious that people would go there. When there’s a big pile of money around and all you have to do is just maybe reach your fist out and grab some of it, it’s very tempting. The degree of fraud, the irresponsible spending and money that we don’t have, has millions of Americans legitimately concerned for the future of the country, particularly in terms of economic opportunity for their kids and grandkids, because people instinctively know.
So here comes Obama in 2009, his first couple of months in office, loving the fact that the economy’s in bad shape, blame it on Bush, blame it on Iraq, just continue that theme and say, I want $800 billion to stimulate this economy.”
And the low-information crowd, “Yay,” new president can do anything he wants. Where do you get the $800 billion that you’re gonna pump into the economy, for example? It’s not as though there’s $800 billion laying around that isn’t being used. It’s not as though there’s $800 billion or a trillion or $500 million or a quarter, there’s not that money laying around idle that you can just take it and put it in a syringe and inject it into the economy and massively grow it.
That’s not how it happens. Where does the government get the money? They have to take it in the form of taxes or borrowing. They take the money from the economy that they’re gonna stimulate. It simply was mathematically economically impossible to stimulate the federal economy the way they did it.
The way they did it was to take $800 million out of it and then put it back in. But it was worse than that. Because the money didn’t go to infrastructure. It didn’t go to roads and bridges and schools and all that. It went to union employees so that they would not lose be their jobs, so that their dues would continue to be paid and circuitously end up back in campaign coffers of Democrats.
Even after it was learned that the train was going twice the speed limit, didn’t matter. Infrastructure, infrastructure, infrastructure, Republicans are cheap, accident because of Republicans not caring about average people. Republicans only care about the rich. Average people died, Republicans don’t care. We Democrats do.
Well, where were all of the speed reduction systems? There’s supposed to be some. But do you know the national transportation safety board has given Amtrak until the end of the year to install them all. They weren’t installed yet. The Democrats saw the dead bodies, they saw the injured, they saw the mangled wreckage, and what did they see? They saw an opportunity to advance their agenda. They saw an opportunity to expand government.
They saw an opportunity to once again defame conservatives and Republicans. They misstated facts, such as dilapidated infrastructure was the cause of the derailment. They did that to get more guilt money to launder for their political party. But that’s the M.O., folks, that’s the M.O. of the Democrat Party. This is how Democrats work. Clinton Crime Family Foundation is the stimulus bill, is Obamacare, it’s a lie packaged as compassion.
JASON: That is a great explanation of opportunity cost, and you’re taking money out of the economy to put back in. How does that work? I’ll explain to you what the Democrats justify that on when we come back.
JASON: Part of the stimulus package — not stimulus, “infrastructure” package, which is not infrastructure at all, but then again, anything’s infrastructure these days (just ask Kirsten Gillibrand) — is a massive tax increase. Now, I gotta be honest with you. I’m torn on this. Because I’m tired of carrying the water for big CEOs that want everything in the way of lower corporate taxes and less direct examination — all good policy — but then stab conservatives in the back every chance they get with carbon footprints and boycotting Georgia and funding BLM and all of the rest.
Why are we carrying the water for Big Tech or for all these internationalists or these hedge funds or private equity firms? I’m tired of it. Having said that, on mom-and-pop small businesses, taxes are the kiss of death. And it is the same reason that Rush was talking about a moment ago, and that is what economists call “opportunity costs.” There is no such thing as a free lunch.
Everything the government spends comes out of the private economy. There’s three ways they do it. They can tax — obviously that comes out of the private economy — they can borrow — that comes out of private capital — or they can inflate. And that’s what they’re doing now. And this is the way this is going to end, and it’s not gonna be pretty. We’re already seeing inflation coming back. Producer prices rose 1% in March.
There’s a chip shortage. Raw materials are skyrocketing. The 10-year Treasury’s finally moving towards 2%. What’s gonna happen is the Fed is gonna try to keep interest rates low. But the long-term capital markets are gonna say, “No, I don’t believe you. I think inflation is back, and I’m not gonna loan somebody money at 4% when inflation is running at 5%.”
So they’re gonna raise interest rates. When they raise interest rates, that’s more the government has to spend on borrowing. And these officially low interest rates — which has created a number of bubbles in real estate and the bond market, in the stock market, you name it – the bubble’s going to burst.
And when it bursts you’re in a full-blown depression that will make the housing crisis look like a walk in the park. There’s no way we can service the debt we’re accumulating right now. We’re whistling past the graveyard, and raising taxes will not solve the problem because when to tackle spending. Here’s what Rush said about that.
RUSH: Joe Biden: Patriotism equals tax increases. Good Morning America today, Kate Snow said, “We’re talking to people through every state that we’re visiting about the money they just lost in the stock market, about their 401(k)s. What do you say to those folks?”
BIDEN: We want to take money and put it back in the pocket of middle-class people.
SNOW: Anybody making over $250,000 —
BIDEN: Is going to pay more!
SNOW: — is going to pay more.
BIDEN: You got it! It’s time to be patriotic, Kate — time to jump in, time to be part of the deal, time to help America get out of the rut — and the way to do that is they’re still going to pay less taxes than they paid under Reagan.
RUSH: So these people, they can’t help themselves. It’s in the DNA: Raise taxes no matter what. The last thing this situation needs now is — in fact, you know what the situation needs? Nancy Pelosi and Dingy Harry, before you get the hell out of town with your tails between your legs, cut corporate taxes. If we need to do anything with taxes, it’s cut corporate taxes right now. I love these guys running around promising tax increases. Here’s Biden on the stump yesterday in Ohio.
BIDEN: I used to be a councilman. I left that for this job, for the Senate. You know why? Your job was harder. (rimshot)
RUSH: Joe Biden, the city council job is harder than the job in the Senate.
JASON: Damn shame he didn’t stay there, isn’t it? The lies here are probably too many to number, too many to go through, but just consider this. Spending outlays from October through March, in the Wall Street Journal today, from October through March — and this is from the CBO as well as the OMB — rose to $3.4 trillion.
Now, listen. Tax receipts rose 6% to $1.7 trillion. The difference is the deficit. So receipts are up 6%. That’s not a tax crisis. That’s not a tax cut deficit. But spending rose $3.4 trillion. Hence, we have $2 trillion deficits as far as the eye can see. Taxes do nothing to solve the problem.
No matter how the government finances its spending, it all comes out of the private economy, whether they tax, inflate, or borrow. The only solution is to put a lid on government spending the way we attempted to do when I was on the Budget Committee in the 115th Congress and when we actually, for the first time, went after entitlements.
JASON: Pensacola, Florida, Teresa, thanks for your patience. You’re on the Excellence in Broadcasting Network.
CALLER: Good afternoon, sir. I have tried for 32 years to get on, and it’s an honor to be able to do so today.
JASON: Well, Rush would be honored.
CALLER: You were speaking earlier about how the government is doing the trillion dollars where they’re just making money to pay for bills that they create and trying to replace the money with no money, actually, and in banking, I worked —
JASON: MT, we call it. It’s a new version of printing money. They just came up with a different name. It’s called “modern monetary theory.” It’s what the liberals are trying to sell. MMT. Really it’s just fiat money that eventually will drive up an asset or consumer pricing.
CALLER: Yes, sir. Well, when I worked in a banking institution, they called that kiting, because people would write a check for money they didn’t have and then replace it with money that they didn’t have. So it never washed itself out. It just wasn’t real.
JASON: Yeah, the fed has gone… This is why we need Federal Reserve reform. The Fed has gone from being the learned of last resort to America’s lender. It just doesn’t buy and sell T-bills on the Federal Open Market Committee to control the money supply anymore. It buys mortgages’ it buys all sorts of assets.
I think the total assets The Fed holds now… I can’t remember the exact figure. It’s in the trillions. Well, when The Fed buys all of these assets — you got a bad loan; The Fed will buy it — they put money into the economy. The money is going to chase something, isn’t it, Teresa?
CALLER: Yes, sir.
JASON: People think money’s wealth. If you had helicopters dropping money out of the sky, you wouldn’t be any wealthier. The cost of everything you buy would just go up.
CALLER: Exactly. Exactly. And I own my own business, and it’s not a big business. I mean, my hands work from the time I get up in the morning at 5 a.m. until sometimes at 6 o’clock in the evening. My business consists of myself and my daughter, and if we don’t work, we don’t get paid —
JASON: You just brought up something —
CALLER: — and so when we can’t afford something, we don’t buy it.
JASON: You know, you’re 100% right, and you brought such an important point, and I’m sorry to cut you off but I’m up against the clock here. But it’s a great point. We have right now — in the name of financing massive amounts of government debt — an assault, an absolute assault on people like Teresa who are saving for their future, not only low interest rates, which deprive coupon clippers of their life earning.
Not life earnings, but deprive them of fixed income. You know, when you’re the money market rate isn’t 5%, it’s 0.05%, you can’t live on that savings. Not only that, but inflation is gonna rob you of all of your assets. This… I shouldn’t say all of your assets. They’ll actually inflate. But it’s gonna rob you of your savings.
If you save a hundred bucks today, you got a hundred bucks. If the prices double tomorrow, that hundred bucks is worth 50. We are assaulting saving in the name of artificially low interest rates so government can borrow trillions of dollars.