We are, the pundits tell us, staring down the barrel of an economic catastrophe. By this time next week, we may all be huddled in our darkened hovels, breaking up furniture for our meager fires, roasting the family dog for our sustenance, and dreading the likely invasion by the great Canadian menace.*
*By cutting government spending and not raising taxes, the Canadians have not only turned a deep recession into an economic boom, but have set an embarrassing example which our leaders in Washington and our press have taken great pains not to notice. The Canadians indeed are a menace.
But fear not. DrRich is here to assure his readers that, despite what you’ve been told, this isn’t Armageddon. He offers three proofs for this assurance.
First, the debt limit is a meaningless fiction.
The term debt “limit” implies that there is some limit to the amount of borrowing which we can do; that we may borrow money up to a certain and well-defined point, and no further. But history tells us this is absurd.
Each and every time we decide we’d like to spend more money than the debt limit says we can spend, we simply increase the debt limit. We have blithely blown past dozens of supposed debt limits in recent years, with nary a glance behind us.
DrRich is not sure why we have a debt limit at all. At some point, he supposes, somebody determined that publishing a debt limit would convince people (which people? the voters? the credit-rating agencies? the Chinese?) that we actually have some sort of built-in controls to our fiscal profligacy. But surely, after decades of treating our debt limits with less regard than one would treat speed bumps during a police chase, nobody can actually believe that we would honor those limits, ever, under any circumstances. It is obvious that the only thing debt limits can accomplish is to create transient, artificial fiscal crises, like the one we are all enjoying now.
The only logical solution to our current crisis is to simply eliminate debt limits once and for all. We would not be giving up anything substantial, since no debt limit has ever been honored nor ever will be. Debt limits clearly do no good; they only cause trouble.
So DrRich offers this solution, this change we can all believe in: Eliminate the debt limit altogether.
No problem which has such a simple and happy solution can be Armageddon.
The second reason this is not Armageddon is: One cannot schedule Armageddon.
The current debt ceiling, the one we’re going to exceed on Tuesday, is $14.3 trillion. The President wants it increased by another $2 trillion or so, enough to delay the next debt ceiling crisis until after his re-election. This, of course, is understandable. The Republicans, it appears, would like to increase the debt limit by a lesser amount, so that the next crisis will occur at a time more to their convenience. This is also politically logical.
The point here is that, by simple manipulation of the value of the meaningless fiction known as the debt limit, we have full control over scheduling the next debt crisis which will threaten our markets, economy, &c.
A feature of Armageddon upon which everyone can agree is that it cannot be scheduled. Therefore, this is not Armageddon.
The third reason this is not Armageddon is: The amounts of money we’re talking about are too trivial.
Everyone is arguing over the questions of whether we ought to leave the debt limit at $14 trllion, or increase it by another $2 trllion or so, and whether we ought to cut spending and/or raise taxes by a mere $100 billion a year or so. And the results of these arguments, we are told, will determine whether or not, in a few days, the skies will split asunder and the seas will boil away, and Old Farts like DrRich, suddenly bereft of our God-given entitlements, will immediately be reduced to dining on cockroach-kabobs toasted over a smouldering dung fire.
But worrying so much about increasing our debt by another $2 trillion (an amount so massive, so huge, as to be unimaginable to mere mortals) is akin to worrying about having another smoke as one lies dying of lung cancer – it sure won’t help, but either way, the outcome is the same.
Our debt limit, as huge and unmanageable as it is, is not only a fictional construct, but it serves as a soothing distraction from our real fiscal problem – the one that really does promise Armageddon.
Our unfunded liabilities, over the next few decades, for the things our society has promised and is obligated by law to shell out for us Old Farts – things like Social Security and Medicare – is at least $62 trillion, and some have projected double that amount. Now, there’s a real problem.
We can’t talk about that, though. If a politician proposes the first, meager step towards finding a solution to that, they will show up in a TV ad pushing sweet old ladies off a cliff.
In any case, we are not facing Armageddon next week.
That’s for later.