So, the state is now finding itself flush with cash, thanks to a succession of federal infusions. How much cash? Well, just to start with, the CARES dollars from last year amounted to more than $25 billion. Next up was HR 133, the 5,593-page Consolidated Appropriations Act of 2021, passed in the waning days of December, which added roughly another $10-20 billion to Colorado’s ledger; followed, of course, by the state’s share of the $1.9 trillion COVID stimulus/relief package, another $20-30 billion.

So all of this adds up, on the low end, to around $50 billion, perhaps more as the figures are updated in due course. Just to inject a bit of perspective, Colorado’s annual budget averages around $30 billion.

That’s enough money, in other words, to do quite a bit with. For instance, CDOT’s entire 10-year transportation plan could be completely funded, without breaking a sweat. A rounding error could account for an overpass somewhere.

That, however, is not the world we live in. Despite all this newfound money, the state has still managed to blow through around $2 billion in state surplus funds. And this is before we even get to the major budget fights over things like transportation and education. Oh, and Colorado’s Unemployment Insurance Trust fund will find itself saddled with more than $1 billion in federal loans by the end of this fiscal year, meaning that, despite the state getting nearly double its annual budget from the feds, Colorado businesses will still face enormous tax increases over the next decade. Over the next two years alone, UI taxes in the state are projected to go up by more than half a billion dollars, and that is before factoring in the interest charges businesses will be assessed to pay back the billion dollars in loans.

Euphoric indulgence in Keynesian illusions tends to arrest the obvious and necessary question: where is all this dough coming from? We all know the federal government managed to find a way to spend nearly $2 trillion on a COVID relief package without having to let any significant amount actually go toward anything remotely associated with COVID. That merely empowered them to keep going, as Congressional Democrats and the White House are already cooking up plans to spend another $2-4 trillion on an infrastructure package. Which, if it is anything like the COVID relief package, may accidentally direct a few dollars to a road or bridge somewhere.

All this money can only materialize through new taxes or, like the $1.9 trillion COVID package, through deficit financing. And what does that mean?

What it means is that we are spending money that we don’t have, any moral injunction against doing so having long evaporated. Where the road ends is not definite, but there are few options for happy endings. Debt incurs national economic injury when it becomes necessary to devalue the dollar as a result of withering confidence in the credit of the United States. The national debt is now at $28 trillion, and gestating. The only way to attenuate a figure like that is through a relative rise in incomes over against outlays – or via inflation, which is the enemy of stable economic growth and a pernicious destroyer of savings and enterprise.

No less a figure than President Eisenhower recognized this, when he told a Republican lunch crowd “This is not a fight to balance the budget as an end in itself. This a fight … to protect the worker as he earns his pension and the retired man who must live on it … to prevent prices from impoverishing every man, woman and child in the nation.”

One recalls the famous New Yorker cartoon from the 1930s; at the height of the New Deal, President Roosevelt’s advisers were growing increasingly nervous of the amount of money being spent – until Lord Maynard Keynes gave them an out with the intoxicating illusion: “We owe it to ourselves!” the cartoon depicts the euphoric advisers joyously proclaiming, hands clasped while dancing merrily around a satisfied Roosevelt. But it IS an illusion, a financial shell game. The end to this road is inflation, and inflation is the most pernicious tax there is. Milton Friedman once said “the tax burden is what the government spends, not those receipt’s called “taxes”; and any deficit is borne by the public in the form of hidden taxation.”

There is a cost to all of this spending, not the least of which is any remaining shred of pride in the maintenance of responsible self-government.