Flirting with Fiscal Armageddon: Notes on the U.S. Debt Crisis
Let me confess right here that I never advanced past Economics 101. To my undergraduate mind, the Dismal Science just seemed to lack the visual sweep and splendor of ancient history, art or even evolutionary biology. The only illustrations in my overpriced economics textbook were graphs, and the prose didn’t exactly crackle with energy or humor.
My aversion to economics persists to this day, so the opinions I offer here are strictly those of a perplexed amateur. But that’s all right, because the financial disasters of the past few years have convinced me that everybody is perplexed when it comes to economics — including the economists. The subject is simply too vast and too convoluted for our simple mammalian brains to comprehend.
Any human who pretends to understand the system from top to bottom is doing just that: pretending. And we don’t want to deal with pretenders when we’re facing fiscal self-immolation.
Meanwhile, the time bomb is ticking. As of this writing, the federal government has less than two weeks to get its act together and avert the first debt default in the history of the republic. What does that mean, exactly? In the simplest possible terms, as I understand it (and believe me, I understand it only in the simplest terms), it means that the U.S. has to raise its credit limit or it will no longer be able to borrow money. When it can’t borrow money, its checks will start to bounce. And when its checks bounce, its credit rating will go pffft!
That’s not good. In fact, it could be horrific. As former Treasury Secretary Lawrence Summers quipped when asked what would happen if we didn’t raise our debt ceiling, “It’s going to be Lehman [Brothers] on steroids, it’s going to be financial Armageddon.”
The Federal Reserve, our government’s trusty banker, is reportedly preparing a “doomsday” plan, as are several Wall Street institutions. A default would undermine an assortment of federally backed financial products, ranging from treasury bills and real estate investment trusts to grandma’s money market fund. We could witness the third disastrous stock market collapse of the still-new century.
You can bet that our banks will do everything in their power to preserve their capital, along with the personal finances of their top clients. The rest of us will be on our own.
That goes for the 50 states that comprise our indivisible Union. Like college kids cut off without an allowance, the states would be running up insurmountable debts of their own, and their individual credit ratings could collapse. We’re looking at a nuclear chain reaction in the making.
The resulting economic devastation could be incalculable. So, too, would be the devastation inflicted on the American psyche. Some of the more pessimistic pundits are suggesting that we might never recover. Centuries from now, historians would be scratching their heads in amazement, wondering how this towering economic juggernaut could have incinerated its own house when it would have been such a simple matter to save it.
The point is that we can still save it. And I’m betting that we will. (By the time you read these words, the issue might already have been decided one way or the other. )
America could easily lift the debt ceiling and still conjure up inventive measures to reduce our staggering $14.3 trillion running tab. It could pull the plug on its endless and unwinnable wars against religious fanatics… could stop propping up corrupt foreign regimes… could quit subsidizing favored corporations… could raise taxes on top earners and tax capital gains as income… could cut back on cushy benefits for federal workers… could streamline the mindboggling bureaucratic machinery that dictates what sort of light bulbs Americans are allowed to buy.
Instead, our elected representatives are flirting with national suicide.
So why are Congressional Republicans and President Obama playing chicken, speeding toward each other with blazing headlights as the August 2 deadline approaches? What personal and partisan agendas could possibly rank higher in their priorities than the future of America?
Good question. Glad I asked it. Today’s militant Republicans are wedded to two overriding principles: 1) Keep taxes at a minimum (read “Do nothing to impair the ability of the elite to amass more wealth and power”) and 2) Destroy Obama. The president, for his part, needs to reinforce his moderate-liberal street cred by protecting entitlement programs as much as they can be protected.
So far, Obama has shown a greater willingness than his G.O.P. adversaries to compromise for the good of the country. The Senate’s hearteningly bipartisan “Gang of Six” reached a reasonable compromise solution, too: they agreed that we could scale back a few entitlements as long as we closed some egregious tax loopholes that favor the plutocrats.
But the rogue Republicans in Congress refuse to concede even that much. Force our favorite corporations to pay taxes just like workers? Let the Bush-era tax cuts expire on schedule — and risk alienating our base? Compromise with that Kenyan in the White House? Never!
America and its people should never be held hostage by a narrow and selfish ideology that represents the interests of a favored few. In fact, the trouble with our hoary two-party system is that it no longer serves the interests of the majority. More than ever before, extremists drive the debate, nominate the candidates, win the elections and serve the special interests who put them in the driver’s seat. This has to stop.
Should we launch a third party to cover the mid-region of American political thought? I think we should. But sooner than that, we need our representatives — and especially Obama’s stiff-necked Republican opposition — to drop the stubborn ideological blustering and avert the debt meltdown. I still trust that they will. They’d better.
I have a suggestion, and I’m absolutely serious: if the U.S. defaults on its debt as a result of partisan intransigence, with all the attendant economic unraveling and long-term ruin promised by our professional prognosticators, we should consider charging those intransigent representatives with high crimes and misdemeanors, not excluding the ultimate accusation reserved for those who betray their country: treason.
That’s right. You heard it here at The New Moderate, of all places. And why not? Moderates can and should react fiercely when politicians sabotage the nation. We’re under no obligation to be perpetually polite in the face of hyperpartisan brinksmanship, and we can’t afford to stand idly by while America implodes. In times like these, we need to think a little more like radicals.
We wouldn’t become leftist radicals, of course; we’re not talking about collectivizing the means of production (whatever production still survives in the U.S.). No, we’d become radicals for justice, for balance, for common sense. But we’d tolerate nothing less. Just ask gentlemen like Ben Franklin, John Adams and George Washington if being a moderate means ruling out radical action. If they could still speak, I think you know what they’d tell us.