by Sennholz
[Foreword and Author Biography]: An introductory overview of the book's significance, framing it as a rigorous defense of economic principles against political entitlement. It includes a biographical sketch of Hans F. Sennholz, highlighting his expertise as a monetary theorist and his academic background. [Title Page and Publication Information]: The title page and formal publication metadata for the 1987 edition of Debts and Deficits, including copyright information and ISBN. [Table of Contents]: A comprehensive table of contents outlining the book's structure, divided into two parts: 'Social Goals And Federal Outlays' and 'In Search of a Solution'. It lists chapters covering deficit spending, the ethics of entitlement, underground government, and various proposed reforms like privatization and a balanced budget amendment. [Front Matter and Acknowledgments]: The author provides a table of contents for the final chapters, lists permissions for previously published essays, and acknowledges colleagues and family members who assisted in the production of the book. [Introduction: The Dangers of Deficit Spending]: Sennholz argues that deficit spending is a form of 'living beyond one's means' that consumes productive capital and invites poverty. He posits that the U.S. has moved from capital accumulation to net capital consumption, leading to a decline in real wages and the inability of domestic industries to compete globally. He criticizes the 'redistribution ideology' and the 'deficit hypocrisy' in Congress, calling for a return to fiscal frugality and the rejection of transfer payments to preserve a free society. [Chapter 1: The Politics of Deficit Spending]: This chapter examines the shift from the historical maxim of balanced budgets to the modern era of chronic deficits. Sennholz critiques the influence of Keynesian economics and the 'pork-barrel' tendencies of Congress, where local interests (the 'parochial imperative') override national fiscal health. He details how 'micromanagement' by legislators protects inefficient government structures and prevents privatization. The section also highlights the ambivalence of voters who fear the deficit but resist specific cuts to entitlements like Social Security and Medicare. [Bureaucratic Management and Public Enterprise]: Sennholz explains why government agencies and public enterprises naturally tend toward expansion and deficit. Unlike private business, which is constrained by profit-and-loss accounting, government bureaus lack market prices for their services and thus rely on arbitrary rules. He argues that 'public' enterprises are created specifically to deviate from the profit system to favor certain groups, leading to inevitable inefficiency and a reliance on taxpayer subsidies. [Chapter 2: Income by Majority Vote]: Sennholz traces the intellectual history of income redistribution from John Stuart Mill to Karl Marx's exploitation theory. He argues that modern entitlements—including Social Security, student loans, and farm subsidies—are based on the erroneous belief that the state can 'justly' redistribute wealth. He provides a detailed critique of Social Security as a 'spectacular failure' that creates generational dependency and analyzes how foreign aid often promotes socialism and economic stagnation in recipient nations. [Chapter 3: The Ethics of Entitlement]: This chapter critiques the moral and economic foundations of egalitarianism. Sennholz argues that 'justice' means receiving the fruits of one's own labor, making compulsory equalization inherently unjust. He challenges the 'welfare economics' of Pigou and Lerner, asserting that the marginal utility of income cannot be compared between individuals. He concludes that redistribution expands state power, discourages the 'vital few' (entrepreneurs), and replaces consumer sovereignty with political command. [Chapter 4: Underground Government]: Sennholz exposes the world of 'off-budget' government, where politicians use quasi-public corporations to borrow and spend without voter approval or constitutional debt limits. He details the growth of these entities at the local, state, and federal levels, including the Federal Financing Bank and various housing and farm credit systems. He argues that these 'underground' activities distort capital markets, create 'moral obligation' debts for taxpayers, and allow for cronyism through noncompetitive bond placements. [Chapter 5: Deficits Do Matter]: This chapter refutes the idea that 'we owe the debt to ourselves,' arguing that government debt is a consumptive drain on the economy that functions as a future tax lien. Sennholz explains the 'monetization of debt' through the Federal Reserve and its inflationary consequences. He links federal budget deficits to trade deficits and the decline of capital-intensive industries. Finally, he provides statistical evidence that real weekly earnings for American workers have declined as a result of these fiscal policies. [Chapter 6: Worse Than 1929]: Sennholz compares the economic conditions of the 1980s to those preceding the 1929 crash. He argues that the Federal Reserve's 'super ease' monetary policy has created a speculative bubble in the stock market that is divorced from corporate profitability. He critiques modern financial innovations like 'junk bonds' and index futures, warning that the current banking system is more vulnerable than in 1929 due to third-world debt and the lack of a gold standard. He predicts a devastating depression as the inevitable result of these 'artificial' booms. [Chapter 7: Palliatives and Panaceas]: The author introduces the second part of the book by describing the gathering 'storm' of economic and social disorder. He criticizes those who ignore the dangers or offer 'empty palliatives' like superficial privatization schemes without addressing the root causes of debt and deficits. [Privatizing Federal Functions: Seven Different Meanings]: Sennholz examines the various interpretations of 'privatization' used in political discourse, noting that most forms fail to reduce federal spending. He identifies seven distinct meanings, ranging from the genuine sale of assets to the use of private contractors and voucher systems. He argues that many of these versions actually strengthen the entitlement state by creating new classes of beneficiaries or merely making government agencies more efficient without reducing their scope. [Genuine Privatization and Asset Liquidation]: The author defines genuine privatization as the sale of government assets at market prices to individuals who acquire unhampered title. He highlights the massive federal land holdings in Western states and suggests that liquidating these, along with enterprises like the Strategic Petroleum Reserve and the Synthetic Fuels Corporation, could significantly reduce the national debt and expand the private wealth base. [Political Privatization: Sales to Favored Individuals and Counterfeit Sales]: Sennholz critiques 'counterfeit' privatization, such as selling assets to favored individuals at bargain prices (citing the Thatcher model) or selling assets while maintaining regulatory control. He argues these methods are often just new forms of transfer programs that enrich specific groups at taxpayer expense. He specifically mentions that selling utilities like AMTRAK or airports without removing regulatory oversight does not change their economic status as government-controlled entities. [The Limits of Private Contractors and Voucher Systems]: This section explores the use of private contractors and vouchers as tools for privatization. Sennholz argues that contracting out services often fails to save money because civil service protections prevent the dismissal of government workers, leading to interagency shifting rather than staff reductions. He further contends that voucher systems for education and health care actually expand government influence and control over private institutions by imposing official conditions and regulations. [The Sale of Loan Portfolios and the New Collectivization]: Sennholz criticizes the sale of federal loan portfolios, such as student loans, as a 'counterproductive' form of privatization. He argues that these sales allow the government to tap into private resources and consume capital while hiding deficits through off-budget accounting. He views this as an extension of collectivization rather than a return to market principles, as it still involves government-directed credit activity that crowds out private borrowers. [The Line-Item Veto and the Budget Process]: Sennholz analyzes the breakdown of the federal budget process, characterized by 'continuing resolutions' and political gridlock. He examines the proposal for a line-item veto as a solution to curb spending. He provides historical context on the executive's role in budgeting, noting that the Founding Fathers originally gave budgeting power to Congress. He argues that the tension between the President and Congress is an inherent result of the entitlement state's redistribution functions. [The Line-Item Veto: A Shift of Power, Not a Budget Solution]: Sennholz concludes that the line-item veto is a 'mere palliative' that would not significantly reduce the deficit, as most spending (entitlements) would be exempt. Instead, it would dramatically shift power to the President, providing a tool for political reward and punishment. He argues that no structural reform or law can balance the budget as long as the public and politicians remain committed to the 'lore of political bounty' and entitlement ideology. [A Balanced Budget Amendment]: Sennholz examines the movement for a Balanced Budget Amendment, tracing its history from the 1970s through Congressional votes in the 1980s. He critiques the idea that a constitutional fix can solve a problem rooted in the popularity of political spending, arguing that such an amendment would likely be ignored, reinterpreted, or bypassed through 'backdoor' spending, much like the failure of Prohibition. [Taxes and Tributes]: This section analyzes the shift from traditional taxation to 'functional finance' under Keynesian influence, where taxes are used for social engineering and economic control rather than just revenue. Sennholz critiques the Gramm-Rudman Act as political theater and reviews the Tax Reform Act of 1986, arguing that tax increases generally feed further spending rather than reducing deficits, while harming capital formation and economic mobility. [A Letter to the President]: Sennholz recounts a letter he sent to President Reagan in 1981 advising a 50% presidential salary cut and a freeze on transfer spending to set a moral example for fiscal discipline. He critiques the 'splendiferous' lifestyle of the modern presidency and the frequent pay raises Congress grants itself, contrasting this with the frugality and balanced budgets of the Founding Fathers. [The Coming Storm]: Sennholz predicts an inevitable economic crisis resulting from the massive accumulation of federal and private debt. He explores various scenarios for the 'end of the debt era,' including foreign capital flight, a collapse of the international credit system due to third world defaults, and the potential for rampant inflation or acute deflation. He suggests the most likely outcome is a highly regimented economy with strict government controls over finance and foreign exchange. [Eternal Hope]: The final section argues that true fiscal reform must be a moral reform, returning to principles of self-reliance and the sanctity of private property. Sennholz proposes specific steps to dismantle the transfer system, including a means test for Social Security, restoring family responsibility for the elderly, and allowing young workers to opt out of government programs. He concludes with the hope that a 'Freedom Party' might eventually lead a return to economic sanity. [Notes and References]: A comprehensive list of endnotes and bibliographic references for Chapters 1 through 11 of the book. It cites key economic and political works by thinkers such as Adam Smith, Karl Marx, Ludwig von Mises, and F. A. Hayek, alongside official U.S. government budget documents and contemporary economic analyses from the 1980s. [Chapter 11 Notes and Index]: Final citations for Chapter 11 focusing on Social Security reform, medical care regulation, and the impact of the AIDS epidemic. This is followed by a detailed alphabetical index of the entire work, covering topics from 'Absenteeism' to 'Zoos'. [Author's Other Works and Book Advertisements]: Promotional descriptions and summaries of other books by Hans F. Sennholz, including 'The Politics of Unemployment' and 'Age of Inflation'. It highlights the author's perspective from the Austrian School of economics and notes his accurate historical predictions regarding federal debt and the 1987 stock market crash.
An introductory overview of the book's significance, framing it as a rigorous defense of economic principles against political entitlement. It includes a biographical sketch of Hans F. Sennholz, highlighting his expertise as a monetary theorist and his academic background.
Read full textThe title page and formal publication metadata for the 1987 edition of Debts and Deficits, including copyright information and ISBN.
Read full textA comprehensive table of contents outlining the book's structure, divided into two parts: 'Social Goals And Federal Outlays' and 'In Search of a Solution'. It lists chapters covering deficit spending, the ethics of entitlement, underground government, and various proposed reforms like privatization and a balanced budget amendment.
Read full textThe author provides a table of contents for the final chapters, lists permissions for previously published essays, and acknowledges colleagues and family members who assisted in the production of the book.
Read full textSennholz argues that deficit spending is a form of 'living beyond one's means' that consumes productive capital and invites poverty. He posits that the U.S. has moved from capital accumulation to net capital consumption, leading to a decline in real wages and the inability of domestic industries to compete globally. He criticizes the 'redistribution ideology' and the 'deficit hypocrisy' in Congress, calling for a return to fiscal frugality and the rejection of transfer payments to preserve a free society.
Read full textThis chapter examines the shift from the historical maxim of balanced budgets to the modern era of chronic deficits. Sennholz critiques the influence of Keynesian economics and the 'pork-barrel' tendencies of Congress, where local interests (the 'parochial imperative') override national fiscal health. He details how 'micromanagement' by legislators protects inefficient government structures and prevents privatization. The section also highlights the ambivalence of voters who fear the deficit but resist specific cuts to entitlements like Social Security and Medicare.
Read full textSennholz explains why government agencies and public enterprises naturally tend toward expansion and deficit. Unlike private business, which is constrained by profit-and-loss accounting, government bureaus lack market prices for their services and thus rely on arbitrary rules. He argues that 'public' enterprises are created specifically to deviate from the profit system to favor certain groups, leading to inevitable inefficiency and a reliance on taxpayer subsidies.
Read full textSennholz traces the intellectual history of income redistribution from John Stuart Mill to Karl Marx's exploitation theory. He argues that modern entitlements—including Social Security, student loans, and farm subsidies—are based on the erroneous belief that the state can 'justly' redistribute wealth. He provides a detailed critique of Social Security as a 'spectacular failure' that creates generational dependency and analyzes how foreign aid often promotes socialism and economic stagnation in recipient nations.
Read full textThis chapter critiques the moral and economic foundations of egalitarianism. Sennholz argues that 'justice' means receiving the fruits of one's own labor, making compulsory equalization inherently unjust. He challenges the 'welfare economics' of Pigou and Lerner, asserting that the marginal utility of income cannot be compared between individuals. He concludes that redistribution expands state power, discourages the 'vital few' (entrepreneurs), and replaces consumer sovereignty with political command.
Read full textSennholz exposes the world of 'off-budget' government, where politicians use quasi-public corporations to borrow and spend without voter approval or constitutional debt limits. He details the growth of these entities at the local, state, and federal levels, including the Federal Financing Bank and various housing and farm credit systems. He argues that these 'underground' activities distort capital markets, create 'moral obligation' debts for taxpayers, and allow for cronyism through noncompetitive bond placements.
Read full textThis chapter refutes the idea that 'we owe the debt to ourselves,' arguing that government debt is a consumptive drain on the economy that functions as a future tax lien. Sennholz explains the 'monetization of debt' through the Federal Reserve and its inflationary consequences. He links federal budget deficits to trade deficits and the decline of capital-intensive industries. Finally, he provides statistical evidence that real weekly earnings for American workers have declined as a result of these fiscal policies.
Read full textSennholz compares the economic conditions of the 1980s to those preceding the 1929 crash. He argues that the Federal Reserve's 'super ease' monetary policy has created a speculative bubble in the stock market that is divorced from corporate profitability. He critiques modern financial innovations like 'junk bonds' and index futures, warning that the current banking system is more vulnerable than in 1929 due to third-world debt and the lack of a gold standard. He predicts a devastating depression as the inevitable result of these 'artificial' booms.
Read full textThe author introduces the second part of the book by describing the gathering 'storm' of economic and social disorder. He criticizes those who ignore the dangers or offer 'empty palliatives' like superficial privatization schemes without addressing the root causes of debt and deficits.
Read full textSennholz examines the various interpretations of 'privatization' used in political discourse, noting that most forms fail to reduce federal spending. He identifies seven distinct meanings, ranging from the genuine sale of assets to the use of private contractors and voucher systems. He argues that many of these versions actually strengthen the entitlement state by creating new classes of beneficiaries or merely making government agencies more efficient without reducing their scope.
Read full textThe author defines genuine privatization as the sale of government assets at market prices to individuals who acquire unhampered title. He highlights the massive federal land holdings in Western states and suggests that liquidating these, along with enterprises like the Strategic Petroleum Reserve and the Synthetic Fuels Corporation, could significantly reduce the national debt and expand the private wealth base.
Read full textSennholz critiques 'counterfeit' privatization, such as selling assets to favored individuals at bargain prices (citing the Thatcher model) or selling assets while maintaining regulatory control. He argues these methods are often just new forms of transfer programs that enrich specific groups at taxpayer expense. He specifically mentions that selling utilities like AMTRAK or airports without removing regulatory oversight does not change their economic status as government-controlled entities.
Read full textThis section explores the use of private contractors and vouchers as tools for privatization. Sennholz argues that contracting out services often fails to save money because civil service protections prevent the dismissal of government workers, leading to interagency shifting rather than staff reductions. He further contends that voucher systems for education and health care actually expand government influence and control over private institutions by imposing official conditions and regulations.
Read full textSennholz criticizes the sale of federal loan portfolios, such as student loans, as a 'counterproductive' form of privatization. He argues that these sales allow the government to tap into private resources and consume capital while hiding deficits through off-budget accounting. He views this as an extension of collectivization rather than a return to market principles, as it still involves government-directed credit activity that crowds out private borrowers.
Read full textSennholz analyzes the breakdown of the federal budget process, characterized by 'continuing resolutions' and political gridlock. He examines the proposal for a line-item veto as a solution to curb spending. He provides historical context on the executive's role in budgeting, noting that the Founding Fathers originally gave budgeting power to Congress. He argues that the tension between the President and Congress is an inherent result of the entitlement state's redistribution functions.
Read full textSennholz concludes that the line-item veto is a 'mere palliative' that would not significantly reduce the deficit, as most spending (entitlements) would be exempt. Instead, it would dramatically shift power to the President, providing a tool for political reward and punishment. He argues that no structural reform or law can balance the budget as long as the public and politicians remain committed to the 'lore of political bounty' and entitlement ideology.
Read full textSennholz examines the movement for a Balanced Budget Amendment, tracing its history from the 1970s through Congressional votes in the 1980s. He critiques the idea that a constitutional fix can solve a problem rooted in the popularity of political spending, arguing that such an amendment would likely be ignored, reinterpreted, or bypassed through 'backdoor' spending, much like the failure of Prohibition.
Read full textThis section analyzes the shift from traditional taxation to 'functional finance' under Keynesian influence, where taxes are used for social engineering and economic control rather than just revenue. Sennholz critiques the Gramm-Rudman Act as political theater and reviews the Tax Reform Act of 1986, arguing that tax increases generally feed further spending rather than reducing deficits, while harming capital formation and economic mobility.
Read full textSennholz recounts a letter he sent to President Reagan in 1981 advising a 50% presidential salary cut and a freeze on transfer spending to set a moral example for fiscal discipline. He critiques the 'splendiferous' lifestyle of the modern presidency and the frequent pay raises Congress grants itself, contrasting this with the frugality and balanced budgets of the Founding Fathers.
Read full textSennholz predicts an inevitable economic crisis resulting from the massive accumulation of federal and private debt. He explores various scenarios for the 'end of the debt era,' including foreign capital flight, a collapse of the international credit system due to third world defaults, and the potential for rampant inflation or acute deflation. He suggests the most likely outcome is a highly regimented economy with strict government controls over finance and foreign exchange.
Read full textThe final section argues that true fiscal reform must be a moral reform, returning to principles of self-reliance and the sanctity of private property. Sennholz proposes specific steps to dismantle the transfer system, including a means test for Social Security, restoring family responsibility for the elderly, and allowing young workers to opt out of government programs. He concludes with the hope that a 'Freedom Party' might eventually lead a return to economic sanity.
Read full textA comprehensive list of endnotes and bibliographic references for Chapters 1 through 11 of the book. It cites key economic and political works by thinkers such as Adam Smith, Karl Marx, Ludwig von Mises, and F. A. Hayek, alongside official U.S. government budget documents and contemporary economic analyses from the 1980s.
Read full textFinal citations for Chapter 11 focusing on Social Security reform, medical care regulation, and the impact of the AIDS epidemic. This is followed by a detailed alphabetical index of the entire work, covering topics from 'Absenteeism' to 'Zoos'.
Read full textPromotional descriptions and summaries of other books by Hans F. Sennholz, including 'The Politics of Unemployment' and 'Age of Inflation'. It highlights the author's perspective from the Austrian School of economics and notes his accurate historical predictions regarding federal debt and the 1987 stock market crash.
Read full text