Specifically, this relates to the idea of bailing out state governments, but it works in the larger sense on all of Barack Obama’s plans to generate economic growth by swallowing capital. As Tim Pawlenty points out, borrowing money to paper over state budget gaps only kicks the can down the road. All of that borrowing creates a need to repay the money with interest sometime in the future, and the US simply doesn’t have that kind of resources. It’s very much like a Ponzi scheme — one that had been in motion for decades, of course, but one accelerating under Democratic leadership this year:
Minnesota GOP Gov. Tim Pawlenty said Friday that President Barack Obama’s deficit spending is equivalent to “running a Ponzi scheme.”
“They do not have more money. They are broke,” Pawlenty said during an interview on Fox. “Most of the entitlement programs are on the pathway of bankruptcy.”
“The federal government is running a Ponzi scheme,” he said. “It just makes the national debt that much worse.”
Pawlenty said he would be looking to “cut everywhere” with the excepting of military expenditures in order to bring in spending and stated his opposition to using unspent federal stimulus funds to help make up the budget deficits that 48 of the 50 states are facing.
Pawlenty is getting sued by Democrats in Minnesota for his attempts to balance the budget through the unallotment power given governors in this state. They want to hike taxes and spend even more money, while Pawlenty has kept budget growth at about the rate of inflation over his term. Barack Obama isn’t the only one doubling down on Ponzi schemes at the moment, but his repeated attempts to use block grants of federal money to states as “economic stimulus” has enabled states to avoid making the necessary and tough decisions on prioritizing and budgeting to keep from going into bankruptcy.
We’re not on the pathway to bankruptcy. We’re on the free-fall into bankruptcy.