Many will tell you that it is not taxation but debt that is financing the government spending; thus it is not crowding out private spending. I maintain that government debt crowds out private borrowing and investment. Many of my anti-capitalist colleagues say that government spending is not crowding out private investment because interest rates are low. Therefore there is plenty of money to finance private investment. Unfortunately, in an attempt to protect depositors, and the government guarantee of such deposits, the bank regulators have increased the credit underwriting requirements on banks. Consequently, they are not lending to small and medium-sized businesses.

Interest rates are low because the Fed is printing money and as a result significantly increasing the money supply, thereby making money less expensive. The irony of artificially low interest rates is that it reduces the income of pensioners and savers. This in effect shifts money and consumption from savers and transfers it to the government, which is borrowing at artificially low rates.

The business community realizes that the increased money supply is financing government spending and the private sector must eventually pay the piper. Consequently, the business community is not investing as much as it might because it is concerned about inflation and higher future taxes to pay for the borrowing. Since business investment takes time for a return, the businessman making an investment now and expecting a return two or three years from now knows that his taxes are going to be increased with the expiration of the Bush tax cuts and the 3.8 percent new ObamaCare tax on unearned earnings. Thus the businessman is not investing today because he knows his return is being significantly reduced two years from now.