Wednesday, May 27, 2009
Let’s begin by defining bankruptcy for the American government as a situation where we find ourselves unable to pay the interest we owe on our current national debt without borrowing more money to make those interest payments. I know, I know. “Been there, done that.” But imagine that we are so over-extended that domestic and other government buyers of our debt, particularly in light of financial problems they are themselves suffering, are reluctant to buy more. Now what? In laymen’s terminology, we can no longer borrow from one credit card to make the minimum payments we owe on another. People and governments have lost confidence in our government’s ability to manage itself and pay its bills. Our government is broke. Say all you want about economic recovery, this, that and the other, we’re broke. Reluctantly, Congress has no choice but to mandate a dramatic contraction of federal government spending sufficient to produce an immediate and very significant surplus.
It comes, this sudden and dramatic reduction in expenditures, at the expense of both new and long-term core programs. As for the many noteworthy objectives of our new President, it is an end of dreams, a devastating reality check that hurts, not only in terms of its impact upon our citizens and our authority in the community of nations, but because it was so entirely foreseeable and avoidable. The wealth and potential we have squandered are staggering. The embarrassment and loss of self-esteem, unforgiving.
Here’s how it happens…
1. An inexperienced President and Democratically controlled Congress that have no real concept of fiscal management take charge with a huge national debt already in place.
2. Harboring the mistaken notion that government needs to save the economy from itself, the Administration unnecessarily and recklessly wastes a trillion and more dollars we don’t have to spend, telling us we’ll get our money back from the firms it bails out as soon as they recover. To be kind, this will turn out to be wishful thinking.
3. Plans to reduce our commitment (and expenditures) in Iraq are delayed, even while our presence in Afghanistan expands. The costs of national defense provide no relief for our budget deficit. Quite to the contrary, the demands upon our military are increasing.
4. Slowly, the economy begins to recover on its own. The smart, responsible thing to do would be to generate a surplus and start paying down our national debt even if just by pennies a day, or at least minimize the deficit we’re incurring. Unfortunately, the Administration is unwilling to adjust its vision of government doing everything for everyone, all at once and immediately. It is adolescent play by our always well spoken President which we will live to regret. The deficit and the national debt continue to grow at what should be an alarming rate, demanding crisis level attention, were our President not high on his own special cocktail of over-confidence and naïveté.
5. And then something goes wrong, maybe something international that distracts our Administration and Congress and requires substantial additional financial commitments. (It’s the unexpected medical bill or transmission problem that savings or a credit card that wasn’t maxed out might have covered in an emergency.) That does it. Even our most liberal Congressional leaders realize that the incessant criticism from fiscal conservatives has been right – no pun intended – all along. (I’m not a Republican, by the way. Fiscal conservatism isn’t a political party concept. It’s common sense.)
6. So now what? Do we print more money to protect the President’s and the Democratic Party’s religious belief in the power of government? …Whoa. Wait a minute. This is like the Madoff scam, isn’t it? It’s the government version of a Ponzi Scheme, incurring new debt to pay the interest on existing debt.
No. That’s not what we do, at least I hope not. What happens, in this dream I’m having where America always figures things out just before it’s too late, is that our Congress, under pressure from its constituencies which have had it with runaway government spending, takes control of the budget. The President and his Party’s Congressional leaders cooperate, of course, so they can take credit, not for the mess they caused, but for the solution they eventually had to eat.
There, 6 easy steps to the bankruptcy of America, to the rude awakening, the slap in the national face after which, assuming we finally come to our senses, we say collectively, “Thanks. I needed that.”
Being a government is no excuse for fiscal irresponsibility.
Wouldn’t it be nice if, maybe just this once, we didn’t have to wait for a precipitant crisis to solve a problem that was so easy to anticipate?