Is the Tea Party trying to grow the size of the Federal Government?

[justo_tx]

I was already in the "government defaulting would be cata-fucking-strophic" camp, but I read this and found the supposition that the resulting calamity would result in a relatively larger once everything shakes out to be interesting.

Defaulting to Big Government - Simon Johnson - Project Syndicate

Some of the redder meat in the article...

The Republicans are right about one thing: a default would cause government spending to contract in real terms. But which would fall more, government spending or the size of the private sector? The answer is almost certainly the private sector, given its dependence on credit to purchase inputs. Indeed, take the contraction that followed the near-collapse of the financial system in 2008 and multiply it by ten.

The government, on the other hand, has access to the Fed, and could therefore get its hands on cash to pay wages. With the debt ceiling unchanged, this would require some legal sleight of hand. But the alternative would clearly be a collapse of US national security – soldiers and border guards have to be paid, the transportation system must operate, and so on.

Issuing money in this situation would almost certainly be inflationary, but the Fed might conclude otherwise, because the US has never been in this situation before, credit is now imploding, and the desperate credit-expansion measures implemented in 2008 proved not to be as bad as the critics feared.

So this is what a US debt default would look like: the private sector would collapse, unemployment would quickly surpass 20%, and, while the government would shrink, it would remain the employer of last resort.

 

[ly2 from WF]

unemployment would quickly surpass 20%, and, while the government would shrink, it would remain the employer of last resort.

I'd go back to being a fucking drug dealer before I took a job working for the government. And yes, I'm serious. Nothing I hate more than the U.S. government.

 

[cheshire]

Cloward-Piven is a strategy for forcing political change through orchestrated crisis.
The strategy was first proposed in 1966 by Columbia University political scientists Richard Andrew Cloward and Frances Fox Piven as a plan to bankrupt the welfare system and produce radical change. Sometimes known as the "crisis strategy" or the the "flood-the-rolls, bankrupt-the-cities strategy," the Cloward-Piven approach called for swamping the welfare rolls with new applicants - more than the system could bear. It was hoped that the resulting economic collapse would lead to political turmoil and ultimately socialism.

http://Cloward-Piven.com

 

[BigWill]

I'd go back to being a fucking drug dealer before I took a job working for the government. And yes, I'm serious. Nothing I hate more than the U.S. government.

For real. I'd go live in the fucking woods and eat stray cats.

Never going to be one of their puppets.

 

[justo_tx]

http://Cloward-Piven.com

So are you saying that the Tea Patry's intractability regarding any revenue increase via taxes is their camouflage to bring about socialism via a Cloward-Piven scenario?

 

[JakeStratham]

A quip about Simon Johnson (from here), author of the linked piece in the OP:

A crucial point in the case for TARP is that without it, we would have plunged back into another depression. For example, Simon Johnson wrote last week,

People who are opposed to bailouts of any kind like to argue that TARP was not really necessary. Banks could have been allowed to fail and the economic fallout around the world would not have been so dramatic.

This was, of course, the view taken by policy makers in 1929–31, after the Great Crash. Top people at the Federal Reserve and Treasury argued that the United States had experienced a financial mania (true), that a fall in asset prices was long overdue (quite likely, at least for stocks), and that the right approach was to stand back and — in the unforgettable words of Treasury Secretary Andrew Mellon, let the private sector "liquidate labor, liquidate stocks, liquidate the farms, liquidate real estate."

The result was the Great Depression. No responsible policy maker would want to run that risk again.
​

There is so much wrong in the above quotation that it would take a whole book to set the record straight. For now, let me mention two things: First, the only source we have for that infamous Mellon quote is from Herbert Hoover's memoirs, and his point in setting up Mellon's position is to then declare that Hoover didn't listen to Mellon's advice. There is no ambiguity here; Hoover repudiates the liquidationist plan in his memoirs immediately after laying it out.

On a related note:

The Freeman | Ideas On Liberty » The Depression You’ve Never Heard Of: 1920-1921 » Print

I agree with this...

Even in the face of massive shocks requiring large structural adjustments, the best thing the government can do is cut its own budget and return more resources to the private sector. For its part, the Federal Reserve doesn’t help matters by flooding the shell-shocked credit markets with green pieces of paper. Prices can adjust to clear labor and other markets soon enough, in light of the new fundamentals, if only the politicians and central bankers would get out of the way.

<batch processing>
arguments that "things were different back then." The same thing won't work today.
</batch processing>

 

[barman]

The Tea Party is a ruse