America's "Civil War" Debt Battle

August 3, 2011—The major German newspaper Süddeutsche Zeitung wrote that the debt-ceiling battle in Washington had a “civil war atmosphere.” But the war was not confined to atmospherics.

A little over a year ago I wrote “ Producers vs. Expropriators: America’s Coming Civil War? ” The war is here, and the debt-ceiling debacle was one battle in a long-term conflict for America’s future. Like the war that tore this nation in two a century and a half ago, the current struggle is over whether the nation, in Lincoln’s words, can survive half-slave and half-free.

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Can the U.S. survive half-slave and half-free?

America’s producers seek their own happiness and prosperity by creating goods and services to trade with their fellows, based on mutual consent. They put a premium on productivity and take pride in their achievements. They want government to protect their lives, liberty, and property and otherwise leave them alone. However, the expropriators feel that the producers owe them a living and have a duty to serve them. They pressure government to use its taxing and regulatory authority to giv

e them welfare, business bailouts, and special favors at the expense of the producers.Today, the producers increasingly are in bondage to the expropriators—individuals who take out home mortgages they cannot afford, Wall Street bankers who make unsound investments, auto companies that cannot produce cars at a cost that will attract customers, or those who just simply prefer that the government pick their neighbors’ pockets to give them handouts of every kind.

The paternalist politicians who are transforming America into a plantation get their pseudo-sense of self-worth from whipping the producers into creating more and more for them to redistribute. But these politicians know they must pace themselves, taking just enough from producers at any given time so that their victims won’t revolt.

Thus politicians both tax and borrow to hand out “free” health care and waste billions in “stimulus” money, all in hopes that there will be future victims who will pay the bill. And to stifle criticism, they’ve addicted some producers to handouts as well—for example, student loans and expanded Social Security. The debt deal of this week will mean that the federal government will owe nearly $17 trillion by late next year, more than the country’s GDP.

But the victims are rebelling. Their voices made it impossible for the politicians to include new taxes in the debt deal. And they forced some small budget cuts because they understand that federal spending, which produces skyrocketing federal debt, erodes their purchasing power as the value of the dollar drops and inflation ensues.

So the civil war continues. It will be a long war. But as producers shrug off their victimhood and fight, they will win more battles, save their honest earnings from those who would loot it, and in the process, save the country.