Imagine a person who gains an average of ten pounds a year. After a decade, having gained 100 pounds, he decides to go on a weight-loss program during which he will gain only 8 pounds a year. He then boasts that he is losing weight, at a rate of two pounds a year. Fanciful ? Ridiculous ?
Now imagine a family that borrows $100,000 annually to meet its expenses (just assume there would be a lender foolhardy enough to provide the funding). After ten years, the family has accumulated one million dollars in debt. That round figure jars them out of their complacency, and due to the precariousness of their state, for the next several years, they only overspend by $80,000 per year. They slap themselves on the back, even throw a party for themselves and their friends, as they trumpet the news that they have cut their spending, and are reducing their deficit, by $20,000 per year. Ludicrous?
Of course! The first person just continues to gain weight – eight pounds a year – and the second family continues to increase its debt at the rate of $80,000 per year. Who in his right mind would ever consider that losing weight or cutting a deficit ?
Welcome to the American government of 2011 – a President who is in over his head and out of his element and a Congress that presides over an economic catastrophe fueled by farcical policies promulgated by flummoxed but hypocritical legislators.
The news that the debt ceiling will be raised (of course) is being trumpeted alongside the Great Compromise of 2011: the enormous and painful concession that, allegedly, over the next ten years, the deficit will be reduced by two trillion dollars or so (!). But unmentioned in the Kabuki theater of government is that the deficit will actually increase over those ten years by more than ten trillion
dollars. So the whole vituperous debate was over the issue of overspending in
the next ten years by 12 trillion dollars or just 10 trillion dollars. How can
that be considered “cutting the deficit” ? Please see the two examples above.
And note, again, how the deficit will increase more than two trillion dollars
over the next two years (the debt ceiling raise) and the reduction of two trillion dollars will occur (allegedly) over the next ten years. Nothing will change, except that the economy will get worse.
And all that assumes that even two trillion dollars will be cut over the next ten years. The likelihood of that happening is actually nil, even if the solons will piously intone that “they didn’t get all they wanted.” In just this and next year, when the debt ceiling will accommodate another two trillion dollars of deficit
spending, just a few dozen billion dollars will be shaved from spending. In
just two years, the debt ceiling will be raised again, and then again, and
again, with Congressmen proclaiming their fiscal responsibility, their austerity,
their patriotism, and their need for re-election in order to save the Republic.
And Congress can always vote to increase spending and to change this hasty and imprudent legislation.
Finally, the American people have seen bi-partisanship – a bi-partisan disgrace. There are a mere handful of legislators who deserve to serve in Congress altogether, and almost none in the northeast. The Democrats are completely clueless, to the point of corruption. Granted, the Republicans have been big spenders too, but the numbers don’t lie: under the Bush Administration, the government ran a daily deficit of $1.4 billion – i.e., every day, the government spent almost a billion and a half dollars more than it took in. That was unconscionable, until we reckon with the Obama mismanagement that runs a daily deficit of more than $4 billion – i.e., and let this sink in, every day the US government spends $4,000,000,000 more than it takes in – and that figure will continue to increase in the coming years, not decrease. If Obama has spent – annually – a trillion dollars more than the profligate Bush, then it is obvious the American government has a spending problem, not a revenue problem (revenues have increased in the last ten years, especially after the Bush tax cuts), and it is equally obvious that nothing will be done about it.
America, sad to say, is now in decline, precisely as Obama broadcasted during his campaign, and he has deliberately accelerated that decline. It should be evident that the US’s credit rating should be downgraded – how could it not ? The debt is astronomical and is not being dealt with in a serious way by serious people. A person who spent like that could not get a loan even from a loan shark; why should a country be different ?
Perhaps the time has come to place the blame squarely on the guilty parties, and they do not work in Washington. For sure, the politicians of both parties are largely incompetent, many are corrupt and motivated by self-interest, and most serve to get re-elected and prepare their golden parachute. Those who come into office wealthy (most of them) are motivated by power and honor, and yet leave office wealthier. But they are not primarily to blame.
The guilty are the American people, and not merely because they vote these clowns into office year after year. The American people are guilty because they have embraced a narcissism that measures a politician’s worth by how much of other people’s money can be sent their way. Thus poll after poll indicates that Americans do not want to pay more taxes (understandably so) but they also want the government freebies to continue – health care, jobs, Social Security, unemployment, perks. Americans want the free lunch, and then dessert, all on someone else’s tab. They want (or many want) to give illegal immigrants free health care, food stamps and public education – as long as it is on the government’s dime and not theirs, clearly oblivious to the fact that government has no money. Government only has the people’s money, or most importantly, what it can borrow or print.
Politicians who made wild promises to get elected are certainly corrupt, but they knew their adience very well. Congress (and LBJ) willfully and illegally raided the Social Security trust fund beginning in the late 1960’s in order to make the Great Society budget imbalance look better, and knowing they were turning SS into the biggest Madoff/Ponzi scheme in history. The money taken out of each of our paychecks to “provide” a stipend for our retirement is long gone, replaced by the IOU’s of a certifiably bankrupt government. It is all spent. But that money became a slush fund for politicians – here, mainly Democrats again – to use for current “needs,” hence the apoplexy that greeted President Bush’s proposal to allow partial “privatization” of Social Security – i.e., allow people to set aside just 10% of their retirement money and invest it themselves. It doesn’t seem like a lot, but liberals could not allow even that small amount of “retirement” money to be removed from the government coffers and deprive them of their desired spending today. (Of course, they argued that the “market” would cause people to lose money and “endanger” their retirement. What a macabre joke – the Social Security funds are perhaps the worst investment around, notwithstanding that it has all been squandered.)
There was a time in the early years of American independence when only landowners were allowed to vote. What sounds strange to our modern ears actually was quite logical: landowners were the only taxpayers, and only people with skin in the game should have a say in how their money is spent. That changed, of course, until today we have a situation when 70% of the population receives some form of handout from the government (and is very protective of it) but a far smaller number actually have skin in the game. Close to 50% of the population pays no income taxes, but they provide the votes for the politicians who promise to take as much money as they can from the productive and give it – few questions asked, just votes demanded – to the unproductive, and in many cases to the willful poor. Too many people today who do not pay into the system have a disproportionate voice in how other people’s money is spent. That is a recipe for disaster, as the politicians who are dependent on the votes of these freeloaders will continue to be elected by them and to demand an ever greater share of the pie-owner’s pie for their intemperate gluttons. Of course deadbeats should not be allowed to vote, but that is not about to change and is just symptomatic of the decline that is upon us.
Obama’s vision of America was a darker and more constricted one than that of any prior President, and his is a self-fulfilling prophecy. It is an America that is in retrenchment abroad, no longer a beacon of hope and unmitigated supporter of aspirants to freedom, and an America that is a financial mendicant, no longer capable of borrowing money from the Chinese and reduced to “borrowing” from the Federal Reserve (i.e. itself) until the dollar collapses abroad and the house of cards crumples.
Any self-respecting legislator should vote down this charade. But, undoubtedly, the present “Great Compromise of 2011” will pass (and there are some valid reasons for it), and work as well as the Great Compromise of 1850 that fundamentally changed nothing and just delayed the Civil War for a few years. It arguably made things worse, as will this compromise. It deals not at all with the fundamental malady in American life today, and in its duplicity just exacerbates America’s financial state and
I would love to say vote for this-or-that Republican and all will be good. In truth, both parties are wedded to a failing system that is doomed to collapse. Obama’s re-election, which will be the final nail in the coffin of American exceptionalism and greatness, is looking more likely than before. After all, he has the parasite vote locked up; he only needs a few more to put himself over the top.