Tuesday night’s grand entertainment spectacular, the President’s State of the Union address, seems to have been duly reported and completely ignored.  No address by a President has ever said so little while purporting to be so substantial.  Essentially what we heard was that if we take stock of ourselves and make some hard choices to reduce the deficit we can continue to spend beyond our means and enjoy the same debt financed high life that got us into the fiscal predicament that we are now facing.  If only I had found this earlier I might have watched, although Wednesday could have been rough as a result.    

What we discover is that the President is going to oversee us running up more debt this year than ever before.  The CBO is forecasting a deficit of $1.5 trillion this year exceeding last year’s total of $1.4 trillion.  As for those hard choices, Obama has pointedly steered clear of the recommendations of his deficit commission, which in December recommended politically sensitive moves like increasing the Social Security retirement age and reducing future increases in benefits.  There was, of course, little mention of reigning in our spending on foreign aid, overseas military adventurism, and financial market bailouts.

If any business in the private sector were performing like this, investors would never put money into stock, credit markets would charge huge interest rate risk premiums, and customers would likely spurn the products or services of the company because of the likelihood of it going out of business.  But that is in a voluntary market exchange between a customer and a business not a coerced economic submission of a citizen to his government.

The services that government extorts taxes from you to provide would never receive compensation if they were performed by a private company because they are not economically viable.  In the private markets a competitor would arise and displace the malfunctioning organization.  This can’t happen with government however because there is no legal competition to Washington’s economics at gunpoint.  It is precisely this lack of voluntary exchange and the ability to withhold a transaction that makes government so inefficient.  There is no incentive to be more efficient because there is no competition to acquire customers or reduce costs.

What we see in the private sector is the cost of goods should always be declining due to increases in productivity by competing producers.  In fact, up until the 1970s we saw this in a large portion of the economy.  What government now teaches us to expect is that prices are always going up because producers are greedy.  This is in fact a ploy to disguise the egregious theft of assets brought about by inflating the amount of currency versus the assets in the economy.  This is how Washington reduces the value of its debt by shifting it to consumers through inflation.

There is nothing voluntary about your participation in the scam.  You must pay up because someone in a government approved costume will harass you, possibly at gunpoint, and certainly under the threat of kidnapping and imprisonment until you acquiesce.  Despite the fact that you have never made a contract with this rogue business called government, you still are forced to pay for it.  This is called theft and racketeering if engaged in by the private sector, but it is completely legal if you are in the public sector.  Lysander Spooner had it right on this.

What we have in Washington is a culture that is dedicated to spending money now to benefit incumbents delaying the reckoning until the future when someone else will have to face the voter’s wrath.  The possibility of this changing is slim until the free market finally decides to stop financing public enterprises because of their gross inefficiency.  This will only happen when the customers begin to reject the single producer of government services.  When that happens expect governments to get more aggressive about revenue collection and less tolerant of political dissent.

It will all happen under the guise of preserving order for society when in fact it will be Washington that purveys disorder and violence against citizens and private businesses to preserve its own umbilical cord.  The coming financial failure of the US government will be a direct result of the current fiscal and moral bankruptcy that Americans idly sit by and watch now because it’s safe and comfortable.  The faster it happens the better for all of us who are prepared because then we can return to private property rights and live our economic lives voluntarily not under the threat of public institutional violence.

That is why the State of the Union is bankrupt.

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