It’s Time for the Nuclear Option
America’s national debt reached $16,000,000,000,000 about three months ago. That milestone just happened to coincide with the opening day of the Democratic National Convention. We have added another $300,000,000,000 plus since the balloons were released in Charlotte. We are approaching the point at which our debt as a percentage of GDP might take us down. We are in a fiscal death spiral. It is impossible to know exactly when economic Armageddon is coming. But make no mistake about it; if we continue to spend at our current rate, it is coming.
Against this backdrop, Democrats and Republicans are pretending to deal with the pretend crisis that we pretend to be a “fiscal cliff.” I say it is a pretend crisis because it pales in comparison to the real crisis that consists of serial trillion dollar deficits, ballooning national debt, and uncontrolled spending. President Obama and Congressional Democrats continue to make the ridiculous argument that “taxing the rich” is the be-all-end-all path to fiscal responsibility and economic prosperity. Best estimates are that the Obama tax plan would generate about $82 billion annually to help us address our $1.1 trillion deficit problem. To put it in dollar terms we relate to, it is the equivalent of adding a part time job that pays $8,200 per year in a household that spends $110,000 more each year that it takes in! Not exactly a fix. Let’s face it; taxing the rich is about envy and wealth redistribution. No serious person believes this is the solution to our deficit and debt problems.
Republicans are behaving only slightly better. Speaker of the House John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY) have a history of talking tough on spending reductions, but when it comes to performance, not so much. The 2011 debt ceiling “negotiation” ended with an increased debt ceiling and some reductions in the rate of growth in spending. However, once the ink dried on the agreement, almost all of these “cuts” proved illusory.
During the current negotiation process, Boehner and McConnell have held to their promise not to raise tax rates, but have intimated a willingness to eliminate certain tax deductions and credits. This would allow Republicans to compromise with Democrats by raising revenue, but still hold the line on marginal tax rates, thereby remaining on Grover Norquist’s cocktail party invitation list. But the Republicans have not put forward a serious entitlement reform proposal or stated specific spending cuts they would recommend. They have not articulated the big picture well enough to help people comprehend the magnitude of the debt monster we face.
It is obvious to me that working through the usual institutional channels will not result in a reasonable resolution of our fiscal crisis. In the absence of radical action, America is going down economically.
But the Republican controlled house does have one trump card: the debt ceiling. Congress sets a debt ceiling, above which the federal government is not allowed to borrow. We are on the precipice of hitting the current debt ceiling of $16,400,000,000,000. What should the Republican House do? Stop the madness. Cut it off. Don’t raise the debt ceiling. Force lawmakers, the executive branch and the bureaucrats to stop deficit spending. Just like that. Make the addict go cold turkey, and hope withdrawal doesn’t kill him.
Yes I know, this is intemperate and will cause all kinds of anxiety and unintended consequences. I am generally not a radical reactionary. I believe in institutions and decorum and compromise and all that stuff. After all, I voted for the bloated budget passed by the Minnesota Legislature during the 2011 legislative special session because it was the only viable option, given our Governor’s intransigence. It is not my nature to upset systems that have been in place for decades or centuries. However, I don’t see any viable path to fiscal sanity so long as Congress and the President have the authority to borrow money. Words cannot adequately describe the degree to which Washington lawmakers, both Democrat and Republican, have engaged in dereliction of duty on the issue of spending.
It is clear to me we have very few statesmen in Congress, weak leadership in both legislative bodies, and a President who either doesn’t know or doesn’t care that he is the captain of a ship headed for an iceberg. I know the medication I prescribe comes with horrible side effects. But it appears to me it is the only chance the patient has to survive.