08 Mar THE NATIONAL DEBT, AND KICKING THE CAN DOWN THE ROAD
This week it appears John Boehner will conclude his term as Speaker of the House and as a member of Congress with one final ‘deal’ with the Obama administration which will include, among other things, an increase in the national debt limit, along with continued funding of Obamacare and Planned Parenthood.
No doubt there are listeners to Ladies, Can We Talk? and visitors to this website who have the classic “MIGO” reaction to the latest Washington, D.C. dustup about raising the federal debt limit. (That would be “my eyes glaze over”, or MIGO).
When there’s a Republican President, the Democrats find reasons to trot out the usual arguments about fiscal recklessness, and the irresponsible saddling of future generations with enormous debt.
Barack Obama, as a U.S. Senator, did exactly this, in 2006, when George W. Bush was President. Obama’s quote on the Senate floor:
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills. … I therefore intend to oppose the effort to increase America’s debt limit.”
Obama continued in 2006:
It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies. Over the past five years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is “trillion” with a “T”. That is money we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers.”
In 2015, after about 7 years of the Obama administration, the federal debt now stands at more than double what it was when Obama made his Senate speech. And of course, the shoe is now on the other foot, and it is Republicans, or at least conservatives, who sound the alarm over ‘reckless fiscal policies’ that require yet another increase in the federal debt limit.
Hard to blame Americans for tuning out the latest back-and-forth, because it seems to have been going on for decades, and the ‘sky-is-falling’ prognostications from both parties seem not to have proven true. The rank hypocrisy involved in switching sides on the very same issue based on which party is in power in the White House is just one of many reasons the American people hold politicians and both political parties in such low regard.
But is it really true that the national debt just doesn’t matter?
It does matter, and the handling of this issue is the quintessential example of ‘kick the can down the road’ politics that do not seem to matter for the longest time, and then, very suddenly, the end of the road is reached; there’s no more room to kick the can; and the ‘bell tolls’.
An entire economy can collapse as a monumental loss of trust in the government and the government’s currency is triggered by simple fiscal reality: no person, no business, not even a government with the ability to print money, can live beyond its means without eventually facing a day of reckoning.
We can’t in one “LCWT Statement” address the entirety of what’s involved and what’s at stake (that’s why you need to listen to the radio show each week!), nor can anyone truly predict the exact date on which the day of reckoning will occur.
For now, just know this: the federal government is touting its record tax revenues in the past fiscal year, totaling around $3 trillion, which allows for a narrowing of the deficit relative to current spending.
Great news, right? Except that the federal debt, officially somewhere around $19 trillion, but when increased by the unfunded (and uncounted) liabilities involved in various federal entitlement programs, is conservatively estimated at well over $70 trillion (some estimates go as high as $120 trillion).
So we’ll just take away some zeroes and make the federal government’s numbers into a household-sized budget. You’re making $30,000 per year; your annual expenses are running around $35,000 per year, and the total debt you owe is around $700,000.
No need for financial genius here. Forget any intellectual gymnastics or sophisticated-sounding rhetoric to the effect that things are ok.
You are bankrupt.
You will not be able to pay your debt (and no sensible lender will increase your debt limit and allow you to borrow more). You are living on borrowed money and borrowed time, and will last only so long as you can keep fooling those who do business with you and/or can hide your financial condition from those you do business with.
You’re going under—it’s a question of when, not if; a lot of people who depended on you to pay them back are going to be hurt and are not going to trust you ever again; and your children are going to be left wondering: what were you thinking?
Welcome to the US federal government in October 2015.
This is why we need a radical change of direction if we are to preserve America for future generations. This is why “Ladies, Can We Talk?” is on the air, on the web, on Facebook, Twitter and Periscope.
There’s no room left to kick the can.