"Keep your eye on one thing and one thing only: how much government is spending, because that’s the true tax”

Milton Friedman

Nobel Laureate Economics

Keep your eye on one thing and one thing only: how much government is spending, because that’s the true tax … If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt.

RCP: 

It is time to remind Republicans that the same rules of economics still apply to today’s deficit spending. The debate over the “fiscal cliff” presents an opportunity to hammer home what is fundamentally flawed about Washington’s approach to funding government.

Let’s start by finally acknowledging that Republicans who have been complicit in deficit spending have repeatedly violated Grover Norquist’s “Taxpayer Protection Pledge.” While Norquist’s pledge has been effective politically, the policy goals of fiscal conservatives remain unfulfilled, because deficit spending is taxation.

The problem with focusing foremost on preventing new taxes is that borrowing and printing to finance government largesse causes even more pernicious economic distortions

Either you believe in Keynes, who stipulates that long term debt has no consequence, the real cost is the service, or you don’t and you believe govts must behave as if they are a large family with it’s own budget.

Here’s a whole passage from Keynes. Sylvie and Bruno is a Lewis Carroll novel that was surely better known in Keynes’s day than in ours:

Let me remind you of the Professor in Sylvie and Bruno:

“Only the tailor, sir, with your little bill,” said a meek voice outside the door.

“Ah, well, I can soon settle his business,” the Professor said to the children, “if you’ll just wait a minute. How much is it, this year, my man?” The tailor had come in while he was speaking.

“Well, it’s been a-doubling so many years, you see,” the tailor replied, a little gruffly, “and I think I’d like the money now. It’s two thousand pound, it is!”

“Oh, that’s nothing!” the Professor carelessly remarked, feeling in his pocket, as if he always carried at least that amount about with him. “But wouldn’t you like to wait just another year and make it four thousand? Just think how rich you’d be! Why, you might be a king, if you liked!”

“I don’t know as I’d care about being a king,” the man said thoughtfully. “But it dew sound a powerful sight o’ money! Well, I think I’ll wait—”

“Of course you will!” said the Professor. “There’s good sense in you, I see. Good-day to you, my man!”

“Will you ever have to pay him that four thousand pounds?” Sylvie asked as the door closed on the departing creditor.

“Never, my child!” the Professor replied emphatically. “He’ll go on doubling it till he dies. You see, it’s always worth while waiting another year to get twice as much money!”

Perhaps it is not an accident that the race which did most to bring the promise of immortality into the heart and essence of our religions has also done most for the principle of compound interest and particularly loves this most purposive of human institutions.