Armstrong Williams

But it misses the point. Major U.S. investors, including PIMCO manager Bill Gross, have exited the U.S. debt market – citing the increasing riskiness of the assets on its’ books relative to the interest rate it pays to bond holders. They are not likely to return until interest rates rise. And, with total Federal Debt having ballooned to an astronomical $14 trillion dollar – a rise in borrowing costs would have catastrophic effects on the Government’s ability to meet its debt service obligations.

But what seems to get lost in the ideological debate is the fundamental truth. A country with declining national growth should not attempt to fill the gap with a rash of borrowing. At some point, using additional long term borrowing to support short term consumption – whether its’ bank bailouts, stimulus spending or unemployment benefits – constrains future growth. The Obama Administration has attempted to phrase the borrowing as an “investment” in future growth.

But there is a real question as to whether the Government is the best engine for investing in the growth America needs to get our of debt. The ideological line starts here. Would we rather have government ‘invest’ our money for us, or is private enterprise the more appropriate conduit for achieving long term growth?

The U.S. Government was not designed to be an investment vehicle. In fact, its design reflects an intention by the framers of the Constitution, to specifically limit the autonomy and capacity of Government, which they rightly viewed as a necessary evil. As a consequence, Government is inherently wasteful and inefficient. And that’s fine, as long as it is small.

But the political games continue. Legitimate concerns about the amount of government debt and spending are often painted as a smokescreen for reducing our commitment to the poor and elderly. But the fact of the matter is that entitlement programs constitute a majority of current expenditures. If the cuts don’t start there, where will they be made?

It is high time that we clarify our priorities at this juncture, because the decisions we make in this moment in time are likely to stay with us for the foreseeable future. No one would contest the fact that we have to reduce our debt to more manageable proportions. The perils of not doing so are obvious. The difficult challenge we must face is deciding our priorities. And this takes some careful consideration.

One option is to implement selected tax incentives for companies that invest in the United States and hire U.S. workers. Another would involve cutting expenditures on non-productive segments of the economy. The last thing we want though is the government trying to make direct investments with taxpayer money.

Armstrong Williams

Armstrong Williams is a widely-syndicated columnist, CEO of the Graham Williams Group, and hosts the Armstrong Williams Show. He is the author of Reawakening Virtues.
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