The Long View 2009-01-08: Panic Now

Looking back, 2009 really was the start of a huge spike in the US Federal deficit. Until the COVID stimulus, it was the highest it had ever been.

John J. Reilly also offered us some reflections on the death of Fr. Neuhaus, only three years before John’s own unexpected eath.

A great woe: Fr. Richard John Neuhaus died today. He was being treated for cancer, but his death was sudden and unexpected.

As readers of this site will know, I've contributed some pieces to Fr. Neuhaus's monthly journal, First Things, over the years. I think I met Fr. Neuhaus himself just once. We've exchanged a few emails. Many years ago, he wildly overpaid me for a freelance piece, correctly perceiving (without being told) that I needed the money.

Except for some early anti-war hyperventilating, few people have written so much as Fr. Neuhaus and had so little to be ashamed of. There was no such thing as "Neuhausism." Fr. Neuhaus was a sunny Augustinian. He valued the preservation of good things in our world because they were the reflections of the best things in another. To the extent he had a political agenda, I suppose it was to update the principled Cold War prudence of Reinhold Niebuhr for the task of culture war.

Fr. Neuhaus died at the age of 72, which in the Strauss & Howe model makes him an Artist, an institution builder. May the Lord rest his soul, and may his spirit live on in the work he began.

Panic Now

The International Herald Tribune tries to assure us that it is not really so important that U.S. debt is losing its appeal in China:

At first glance, the declining Chinese appetite for U.S. debt - apparent in a series of hints from Chinese policy makers over the past two weeks, with official statistics due for release in the next few days - comes at an inopportune time. On Tuesday, the U.S. president-elect, Barack Obama, said Americans should get used to the prospect of "trillion-dollar deficits for years to come" as he seeks to finance an $800 billion economic stimulus package...

Beijing is seeking to pay for its own $600 billion economic stimulus - just as tax revenue falls sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and midsize enterprises, many of which are struggling with slower exports...

But with U.S. interest rates still at very low levels after recent cuts to stimulate the economy, it is quite cheap for the U.S. Treasury to raise capital now. And there seem to be no shortage of buyers for Treasury bonds and other debt instruments: Prices for U.S. debt have soared as yields have declined...

No doubt the market for US Government debt was adequate last month; maybe it will still be adequate next month. Nonetheless, even the capital-gains zombies at Opinion Journal now suggest that there may be such a thing as a deficit that is too big:

Thanks to a 6.6% decline in revenues due to recession, a spending increase of some $500 billion or 19%, and assorted federal bailouts, the U.S. deficit for fiscal 2009 (ending September 30) will nearly triple to $1.19 trillion.... None of that includes the new fiscal "stimulus" that President-elect Obama has promised to introduce upon taking office in two weeks.

Of course, nothing could persuade the zombies that taxes should rise, even a little, to close the gap. They would not be persuaded even if the economy were overheated from rapid growth and inflation were increasing.

The problem is not that the federal government is spending so much money; the problem is that the money is being borrowed, and the supply is diminishing. The disconnect between supply and demand will not be a chronic phenomenon. In a few weeks, something will just snap.

* * *

Here's an example of how half the political spectrum has gone blank: Scandals show need for limited government, says Colleen Carroll Campbell:

Obama won on the promise of cleaner, better government run by Democrats. But a funny thing happened when the 111th Congress opened this week: The Democratic clean-up crew arrived splattered in mud.... Given how poorly many of our national political leaders handle the perks and purse strings they already control, we should think twice before giving them free rein to exponentially expand government and manage even more of our money.

Actually, what the scandals show is the need for executives and legislators who are seriously interested in governing effectively. One may criticize what the Electus is doing, but that does seem to be true of him and his advisors. It does not seem to be true of the Democratic Congress. Of the national Republican Party, in Congress and outside it, the question does not even arise.

* * *

A great woe: Fr. Richard John Neuhaus died today. He was being treated for cancer, but his death was sudden and unexpected.

As readers of this site will know, I've contributed some pieces to Fr. Neuhaus's monthly journal, First Things, over the years. I think I met Fr. Neuhaus himself just once. We've exchanged a few emails. Many years ago, he wildly overpaid me for a freelance piece, correctly perceiving (without being told) that I needed the money.

Except for some early anti-war hyperventilating, few people have written so much as Fr. Neuhaus and had so little to be ashamed of. There was no such thing as "Neuhausism." Fr. Neuhaus was a sunny Augustinian. He valued the preservation of good things in our world because they were the reflections of the best things in another. To the extent he had a political agenda, I suppose it was to update the principled Cold War prudence of Reinhold Niebuhr for the task of culture war.

Fr. Neuhaus died at the age of 72, which in the Strauss & Howe model makes him an Artist, an institution builder. May the Lord rest his soul, and may his spirit live on in the work he began.

Copyright © 2009 by John J. Reilly

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