I’ve been scanning the news pages for anything that reads like common sense in this whole debt ceiling issue. With very little success. And with less than twelve hours to go before Brucker Bummer, the American Precedent, must sign off on any such legislation or render the world’s largest nation formally insolvent, all I seem to be able to read is droning “insider” punditry and the empty rhetoric of sectional interests.
Obama, from what I can make out, in return for about 900 billion in spending cuts over 10 years, gets an immediate increase in the debt ceiling of 400 billion. With the U.S. government spending over 3 billion a day more than it earns, and given the Fed actually ran out of cash back in May, and has been fiddling the books ever since, this merely keeps the repo man from the White House garage until sometime September. Big deal. Then in return for yet more spending cuts, the ceiling will be raised a further 2 trillion or so. Enough to give The Prez what he really wants, which is to kick the issue beyond the election in November next year.
Like most “peace in our time” compromises (a picture today of Joe Biden waving a copy of the deal brought this comparison to mind) few people outside the professional political class give it much credence. The Tea Party Republicans, if they are faithful to the constituencies which sent them to Washington in the first place, will kick this piece of legislation out of the park. Those whose re-election chances are directly impacted by the spending cuts are making an almighty noise: according to this story, hard-right Republicans are opposed to cuts in military expenditure, while the Congressional Black Caucus called the deal “a sugar-coated Satan sandwich”. Yeah, right.
Congress have to vote on this in the next few hours, and I’ll update this post later today. but the whole issue misses the central point: no-one, not individuals, families, businesses or governments, can go on indefinitely spending more than they earn. Sooner or later, you have to balance the books, and pay off your debt. All the noise today merely concerns the best way in which to kick the problem into the future. In some recent posts I’ve added the proviso of an inflationary default; already there are Keynesian, big-government types in the blogosphere urging Obama to authorise the minting of a trillion dollar coin. The fact that doing this will make all the other dollars worth less, and severely piss off—to put it mildly—foreign governments holding U.S. dollar reserves, seems to pass unnoticed. Not a bad bit of imagery, though.
Anyway, I look forward to your reactions.
Update: Well, with just under four hours till the deadline, Congress has passed the debt ceiling bill, 269-161. the Senate will pass it through tomorrow. As I said, this just kicks the problem into the future a bit, but at least POTUS is now officially on notice.