Truth or Consequences
© 2011 Ross Williams
“A billion here, a billion there, pretty soon you’re talking real money.”
- Senator Everett Dirksen, R, IL
The US is about $15 trillion in debt – $14.3 but who’s counting? …apart from the foreign governments which own almost a third of it. We’ve been in debt since FDR’s days and have added to the national debt each year since with very few exceptions. We had a balanced budget back during the Nixon Administration – just one, I recall – but it didn’t make a dent in our debt. Maybe a dimple.
Then Carter came and, thankfully, went, but only after ballooning our debt by amounts previously unthinkable and making FDR [and LBJ as well] look like a skinflint. Then Reagan came and ballooned the debt further still ... but destroyed the Soviet Union, so at least there was something to show for it. Bush the Elder arrived and spent our Peace Dividend on the type of humanitarian wars that Hollywood lame brains drool over. Clinton soon swaggered in the door announcing “It’s the economy, stupid” and allowed his wife to attempt to scuttle it with Universal Healthcare, making the House turn R in a big way two years later by saying, “Yes, stupid, it IS the economy”, and forcing a series of balanced budgets on Clinton that he didn’t really want to accept. The economy boomed as a result.
The White House Frat Party ended with Bush the Younger moseying in, and one thing led to another as they so often do, and we found ourselves with a suddenly tanked economy, more wars than our enemies could shake their pointy sticks at, and paranoiac federal bureaucracies spending money as if it grew on their printing presses for things they insisted we needed but which we aren’t really so sure about. We added around a half trillion dollars to the debt each year during Dubya, making spendthrift Carter look like a piker.
Enter now the National Savior who insists on a stack of Bibles, Korans or Keynesian textbooks ... whatever works this week ... that his predecessor’s $500 billion annual deficits was bad, and the way to fix it is to throw Mrs Economy-Stupid’s universal healthcare on Dr Frankenstein’s gurney [as well as other things] and create $1 trillion annual deficits. And Barama is making Dubya look like a Scottish miser.
The grand total? about $15 trillion in debt and climbing.
I’ll spare the lecture on how money and the lack of it is either the primary or contributing factor in the demise, destruction and dismemberment of nations, kingdoms and empires. Places like the Western Roman Empire, pre-revolution France, the Soviet Union ... and how self-indulgence is a leading cause of this lack of money [with the Soviets, it was building their nation upon an inherently faulty economic model, which is ideological self-indulgence].
I’ll spare the second lecture on the current state of the world which is seeing a whole series of self-indulgent nations on the brink of collapse and revolution because they can’t stop spending money on things they want rather than only those things they need. Rich, western nations like Greece, Portugal, Spain, Iceland, Ireland, Italy ... and the US.
And I’ll forgo the irony of “the richest country in the world” being the most in debt, and musing upon why so many people don’t know the difference between cash flow and wealth.
But we’re still about $15 trillion in debt. The saddest thing about a nation like the US being in debt is that it is allowed to control its own credit limit. This is like giving a teenager a credit card with a $500 limit, and when he spends $499, we give him the password to the bank’s credit card system where he can add another $500 to his limit whenever he wants. Only the US has the ability to do this. Greece cannot, which is why their Finance Ministry building was set on fire last week during their austerity riots.
The US can do this because the dollar is the world’s “benchmark currency” or some idiot rationalization like that. The world believes they can trust us to be financially responsible. The rest of the world is apparently nuts.
Not that we’re any better. It’s a funny thing about the different political parties we have. Republicans, when they’re the only game in town, spend money like water. Democrats, when they are the only game in town, do as well. However, when Democrats control the House and Republicans control everything else, Democrats still want to spend money like water, but only on things the Republicans don’t want. When the opposite is true, Republicans turn miserly and damn the consequences.
That’s what happened in ’95 under Clinton, and that’s what’s happening now. We have until early August to hack the credit card company and increase our credit limit. If we don’t ... we default. We stop paying bills, the military forgoes paychecks [the Roman legions went without paychecks and started sacking the empire alongside the barbarians streaming across the frontier...], interest rates skyrocket, the financial systems collapse in a cascade of dominos, and the US becomes prime pickin’s for foreign nations to collect on the bonds they own with US collateral.
Of all the foreign nations holding US bonds, China owns the most [$1.2 trillion] – they might want northern California, Oregon and Washington. But Japan [#2 at $900 billion] may give them a run for their money on Washington and Hawaii. Britain may take back New England for their share [3rd place; $333 billion]. OPEC [4th; $220 billion] might like Alaska. Brazil [5th; $206 billion] might take Louisiana and Arkansas. Taiwan [7th; $154 billion] can have New Jersey and Delaware. Caribbean banks [8th; $138 billion] get Florida. Canada may plunder Michigan and Wisconsin just because they can, and I believe Mexico will claim squatters’ rights on southern California and the desert southwest; they’ve been salivating over the area since we rooked them out of it more than a century ago.
But that’s only if we default. ...and if Hollywood writers get hold of the story. Saving us from this outcome are House Republicans and the National Savior. Success is guaranteed.
Their respective positions on this are trivially easy to distinguish: House Rs point out that most of the federal budget is taken up with entitlement expenditures and regulatory authorizations; Barama points at rich CEOs who get tax breaks for owning a corporate jet. And ... well ... waddaya know? They’re both right.
I’ve got no particular desire to see billionaires save a half-million dollars on their taxes by buying a Lear jet, but let’s be rational about this. The problem is in the trillions and CEO tax breaks are in the millions. Corporate jet tax is one millionth of the solution. To provide a metaphor that’s only slightly less incomprehensible, it’s like being a million dollars in debt and going through the couch cushions and finding $1.04 in coins. It won't help. You’re now $1,000,498.96 in debt, because the compounding interest added $500 to it while you were rifling the couch for pennies and dimes.
To put it another way, it's like being $1,000 in debt and trying to pay it with a coupon for fifty cents off a can of Spam.
There’s also a war [or three] to consider. A few hundred billion a year to protect Iraq from itself and Iranian hegemony, and also to protect Afghani dictators from Afghanis and pan-islamist hegemony, and also to protect pan-islamist hegemony from Libyan dictators. Take your pick. One war ... two war ... three war ... these are anywhere from one ten-thousandth of the solution to one hundredth of the solution; between 0.01% and 1%, depending if we want to stop our involvement in Libya alone, or Libya, Iraq and Afghanistan combined. This is more like real money, but it’s still grossly inadequate.
Another easy mark would be the recent regulatory authorization to the FDA of $500 billion aimed at preventing up to 3,000 Americans from getting food poisoning each year so badly that they need hospitalization. That would be a cool 5-10% of the solution, depending on how much other regulatory spending we would be willing to stop. But the main target has to be entitlements.
Democrats elsewhere in the government [and most of them on the street] are less than no help, here. Most are clueless about how our government is supposed to work and refuse to understand the difference between a right and an entitlement. They believe everyone has the right to health care which ... sure. Okay; we have the right. So this, they believe, obliges the government to pay for it.
Incorrect. This obliges you, the citizen to pay for it … for yourself … if you want to exercise that right. A right is what we have when the government gets out of our way and allows us to do something for ourselves. An entitlement is what we have when the government steps in and does it to us. We are given rights by our Constitution; we were not given entitlements.
Would we did have the right to healthcare, rather than the entitlement to it; Medicare, Medicaid and Obamacare would be gone tomorrow – and the deficit would self-correct in a decade or so. Would we had the right to old-age pensions; Social Security would be gone. Welfare, another entitlement, is the “right to be a slug”. These are all entitlements, and they cost us trillions each year. If we’re going to be serious about debt reduction then we’re going to be serious about entitlements.
On the other hand, if we aren’t going to be serious about entitlements, then we’d better become serious about speaking Mandarin or Spanish, because that’s the Hollywood ending here. As for myself, we’ve got plans to move to the high desert in southern New Mexico and raise blue agave for the tequila. Stop by if you can get across the new US-Mexican border. I figure it’ll be north of us, somewhere around Truth or Consequences.
¡Vaya con dios, muchachos!