Reality 101 in a City Where Objectivity is Illegal

House Budget Committee Chairman Paul Ryan renewed a fight with Democrats over spending cuts and deficit reduction, unveiling an updated Republican budget plan Tuesday that aims to cut spending by more than $5 trillion over a decade and balance the budget in that time.

Similar to past proposals, Ryan’s plan would include cuts to food stamps and major changes to government-sponsored health care for the poor and working class. Ryan’s plan would also cut Pell Grants for low-income students and pensions for federal workers, while steering away from cuts to benefits for senior citizens, at least in the short term.

“This is a plan to balance the budget and create jobs, and it builds off a simple fact: We can’t keep spending money we don’t have,” Ryan, R-Wis., said in a statement. [Source: and Associated Press 4/1/14]

You know what they say: Insanity is doing the same thing over and over again, while expecting different results.

What does it mean when people — politicians, or anyone else — keep doing the same thing over and over, going through the motions when even they know they have no intention of following through?

Usually, it means that they’re not really convinced of the need to do anything about what they call the problem. It’s a “floating abstraction,” which refers to when you’re logically or abstractly “convinced” of the need to do something, but you’re not really emotionally convinced. Why not? Insufficient effort has been made to back up those intellectual arguments with facts.

Smokers sometimes have floating abstractions when they say, “Yeah, I know I should quit.” But nothing moves them to change. Or overweight/poor eaters do the same thing when they think, “I should go on a diet tomorrow,” when they don’t even feel like such a thing has a remote chance of happening at all, much less tomorrow.

Sure, there are loads of facts to back up these claims. But to the person who’s not doing anything, those facts don’t seem real. They’re “out there,” somewhere, in the land of objective truth which isn’t necessarily the real world. And besides, they rationalize, most authorities don’t know what they’re talking about anyway. “It won’t happen to me. I’m different. My case will be different.” If it’s not happening right now, it’s somehow not real.

In Congress, it’s probably fair to say there are two types of people: Those who care about reality, and those who do not. The ones who do not care keep calling for more government spending and more raising of the debt ceiling. Their implicit and explicit attitude is, “To complain about spending money we don’t have is simply mean. Besides, we can tax the rich.” Of course, the rich already pay the overwhelming majority of the bill, and our corporate tax rates are the highest in the industrialized world.  No matter, because reality doesn’t matter.

Paul Ryan possibly does care about reality, which is why he keeps bringing it up. But if you look more closely at his budget, it postpones cuts or reforms required for the programs eating up the vast majority of the federal budget: Social Security and Medicare. To his credit, Ryan at least proposes some nominal and partial privatization of these programs, although he probably doesn’t believe they stand any chance of passing even, if by some miracle, we ended up with a different type of President or Congress in the near future.

It’s kind of the like the smoker saying, “Yeah, I know, I should quit. I will eventually.” Keep in mind that government regulates and controls the currency. It’s no longer done in the context of a private market, as it was in the days of a gold standard. Most people take it for granted that nobody but the government can possibly control the currency. But that’s not really the case. The United States grew economically at rates we can only dream of today, back in its first century, and this was without federal control of the currency.

The reason we “need” government control of the dollar is so that government can manipulate things in such a way as to enable deficit and debt increases indefinitely. In short, it’s politicians who wish to spend money on social programs who “need” the government-manipulated Federal Reserve system, so they can spend, quite literally, like there never will be a tomorrow.

In economics, as in philosophy, there are two basic schools of thought. One school says there is an objective reality, and if you evade it you will sooner or later pay a price. The other school says “no worries” — we can simply manipulate or “regulate” (that’s the magic word) our way into getting whatever we wish without having to pay any logical, objective price.

We have entered the period of American history — human history, for that matter, since it has never happened on such a scale before — where we’ll find out which school of thought is right.

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