Sage Advice - What are the True Principles for Making the U.S. National Budget? (5/6)

A Remarkable 2006 Forecast for 2025

Lyndon LaRouche wrote his Lost Art of Capital Budget paper in December, 2006, just ahead of the financial collapse of 2007-2008 which he had long forecast. His proposals were deep sixed by the reigning financial oligarchs who bailed out the culpable U.S. and international banks on the backs of America’s working and middle classes, aided and abetted by the Fed, Bush and Obama, and Congress. Much of today’s national debt results from that atrocity.

America’s New Golden Age Must be Legislated 

Because of this continuing failure of Congressional culture, Donald Trump is forced to implement many of the fundamental economic principles outlined in LaRouche’s paper through Executive Orders.  That opens them up to attack unless Congress follows through with a capital budget which funds Trump’s new golden age for the United States based on scientific breakthroughs, advanced energy and manufacturing resources, and a well paid and motivated working class.

Trump has instituted a project to colonize the Moon and Mars, defend the United States against incoming missiles and drones through weapons based on new physical principles, projects to develop new fission and fusion power energy sources to fuel the economy as his science drivers.  This is fully in line with what LaRouche suggested.

This approach, leapfrogging the present available technological platform for production, is the route to resolving the debt issue:  massive growth, not austerity budget cutting.  As a people, we have already done this once before, in the war mobilization of private industry and government  during World War II, which created the most powerful full set economy in the world within a few years. 

There are many essential tasks ahead in rescuing this Republic. But “the central issue among all these, is the pivotal issue of defining and instituting the needed forms of the U.S. capital budget,” LaRouche insisted.  Here again, is Lyndon LaRouche: 

Without that form of capital budgeting, our republic would not now survive.

The principle governing the design and application of a true capital budget, is a reflection of the principles of physical economy, rather than of a monetary system as such. . .

This practice was standard management and investment thinking in the U.S.A. itself, since 1861, [when President Abraham Lincoln introduced the American System doctrines of Henry A. Carey into U.S. federal practice ] until the rabid fit of “deregulation” launched on the initiative of the reforms introduced by the Trilateral Commission, headed by Carter Administration National Security Advisor Zbigniew Brze­zinski. (See, New York Council on Foreign Relations’ Project for the 1980s, New York, Mcgraw-Hill 1977).

 Notably, to make the technical issue clear, it must be em­phasized that this radical, and ruinous, change in U.S. policy, under the Trilateral Commission, reflected Brzezinski's late 1960s advocacy of the shift of the U.S. economy from its traditional economic practices into the fantasy-world of "in­formation theory" and "artificial intelligence" presented as Brzezinski's notion of a "technetronic" age.

On this same account, it should be added, that, by 1982, with the passing of the frankly wild-eyed Kemp-Roth legislation, and wildly radical hoaxes concocted by the Federal Reserve System and the annual White House reporting on the economy, virtually the last shreds of economic sanity were in flight from both prevailing Federal doctrine and general tax and investment practice.

Soviet General Secretary Yuri Andropov's refusal to discuss President Ronald Reagan's March 23, 1983 proffer of a Strategic Defense Initiative (SDI), not only foredoomed the subsequent collapse of the Soviet economy, but removed vir­tually the last chance for bringing about the shift of the U.S., back to that science-driver form of national economic priority which would have tended to reverse the prevalent economic and related lunacies of the 1970s.

As a reward for those indicated mistakes in national pol­icy, our republic has suffered much, especially the lower eighty percentile of our households, with the immediate prospect of much worse soon, for all of our households. Without a shift back to what a return to a U.S. capital budgeting policy and practice requires and implies, there is no hope for the preservation of our republic over the period ahead, and there would be the assured doom of a planetary New Dark Age for the Eurasian continent. Folly has run its course, too long to be tolerated any longer. It is time for the U.S. Congress, among others, to be suddenly awakened to the realities of the present global situation.

The Deadly Household Checkbook Fallacy 

That much said in background, now to the core of the matter of capital budgeting: The portion of an investment which may be regarded as consumed within a fiscal year, is the portion which corresponds to the part of an investment which has been used up physically. We must not count the balance of investment, after deducting what is used up in the relevant current year, as a current cost. Accordingly, counting Federal outlays for capital projects of several years span, all in the same year the outlay for that project is authorized, represents a case of gross incompetence in judgment, and a source of potential catastrophes if such misguided practices as that are continued.

In fact, if we continue to act, presently, as if Federal funds allotted for capital improvements in the public or private sector were self-evidently current expenses, our national economy were already doomed to experience something far worse than an economic depression, a general collapse like that which medi­eval Europe experienced as a "New Dark Age."

What we must do now, is increase the credit uttered by the Federal government, the only agency allowed to do so under our Constitutional system, such that the total amount allotted in each coming year immediately ahead, vastly exceeds the amount used up during the relevant, current fiscal year. This is clearly a tricky business, but an indispensable one, and represents a chore which we must perform.

The "best way" signifies that the interest charges on the uttered funds must be decently low, probably in the range of 1-2% simple interest, and that the accumulation of added real (physical) capital exceeds the net Federal debt created in this way. This means, in tum, that we must concentrate the allotment of relevant Federal expenditures away from a "services economy," except as a temporary social measure of relief in the public interest, and, stay, absolutely, away from financial­ speculative forms of investments, or, diversion of flows of national income into gambling, or, recreational drug use, or, kindred waste.

The rate of increase of net physical output of the nation must exceed the accumulation of the Federal debt. This, of course, means a proportionately large commitment to increase the capital-intensity of investment in the increase of physical productivity in the national economy as a whole. The needed balance of investment aims at a public sector of basic economic infrastructure outlays in the fairly estimated order of fifty percent, and requires an emphasis on scientific and technological progress, with emphasis on physical production and related investment. The increase of the physically defined productive powers of labor should be measured in absolute, not percentile terms, and should express technological progress, rather than labor-intensity.

The development of the physical economy should be steered by the implications of a large-scale investment in nu­clear fission as a power source, as a leading mode used in a massive program of desalination intended to cure illnesses of the physical economy such as reliance on fossil-water sources, and for the maintenance of other aquifers, the latter as typified by the case of the region from North Dakota down into West Texas. This must be accompanied by a vigorous commitment to bringing on the assortment of known and po­tentially knowable technologies associated with the large­ scale, relatively early development of thermonuclear fusion, both as a power source for the economy, and for a crucial role in augmenting and otherwise managing so-called fossil re­sources.

The expansion of the space program should be seen essentially as a science-driver spearheading much of the applicable advances in technology needed for the improvement of the Earth-bound economy.