The National Debt is Boring

It has been my contention, for years now, that America has exactly zero intention of ever paying down or reducing our national deficit.  There's simply no will for it, not among our venal, self-serving political leadership, not among the investment class, and...most notably...not among most Americans.  We just don't care.  Why would we care?  It's so boring.

We have been taught, for a generation now, that you don't need to pay for the services government provides.  National defense?  Roads and rails?  Protecting our farmers from the vagaries of the weather and the markets?  Insuring the old and the poor aren't starving in the streets?  That just all magically happens, paid for by pixie dust and unicorn farts.

Taxes, as our last president so pointedly put it, are for suckers.  Or they're theft, as goes the line among goggle-eyed ersatz libertarians.  The idea that taxes serve our common purpose is only held by fuddy duddies, fiscal conservatives, and small church pastors.  What happens to a church where members don't contribute together to keep things going?  The building crumbles, and the community withers away.  What happens to a business that only stays open by borrowing from the bank or "investors?"  It flies high until the credit runs dry, and then it dies.  

Despite the witness of reason and history, we somehow believe that this doesn't apply to America.

So we borrow, and we borrow, and we borrow, and the interest on the debt now stands at over a trillion dollars annually.  Dollars aren't worth as much as they were, of course, thanks to the voodoo of Quantitative Easing and our printing nearly forty percent more currency into the economy during the pandemic.  Still, we're at real money here, with the total US debt now standing at 128% of our annual GDP.   The arc of our debt, seen across the history of the republic, looks like something right out of Weimar Germany.   "But that's only because the dollar is worth so much less than it was," you might say, to which I'd refer you back to Weimar Germany.  Our charts and their charts look the same.

Long and short of it: we're going to default.  When exactly is beyond my ken, but it's where we're headed.  A nation that has any intent of paying off the debt wouldn't be seriously considering electing a bankruptcy-addicted drama queen for a second time, eh?  We're gonna max out our credit line, then get more credit at worse rates, then max that out, and then lawyer up and refuse to pay.

So why not just default?  I mean, we're America.  If we say we don't want to pay, who's gonna force us to pony up?  You and what army, we might say, pointing to our tanks and aircraft carriers.  Good faith and credit?  Who needs that when you've got nukes?  

What if the folks we've borrowed from want their money back?  Wall Street fat cats, Saudi Arabia, and China can get stuffed, right?  They'll take pennies on the dollar, and be grateful for 'em.  

Only there's a problem.  Who holds the largest portion of America's sovereign debt?  Who has the most to lose if...no, scratch that, when...we default?  

The answer: The Social Security Trust Fund.  The single largest holder of American credit is the Social Security Trust Fund.  Like all debtors, we've borrowed from our future, but in the case of America, we've done so rather literally.

When we eventually default, it'll bring that whole teetering system down.   The disabled and the elderly will be catastrophically impacted, but that's fine, right?  I mean, the rest of us have mutual funds and retirement investments that wouldn't be impacted at all.  You know that's sarcasm, of course, because the second largest holder of the debt?  Mutual funds.  Then the government of your state, and the government of your county.

It all falls apart.  You'd think we'd be talking about it, but...nah.

This is all so boring.  Yawn.  

Retail Politics and the Tea Party

The relationship between business and politics is an odd one.

On the one hand, politicians are often accused of being in the pockets of business.  Government pork is funneled to contractors.  Industry lobbyists make sure that politicians are kept rolling in campaign donations, just so long as every decision they make favors industry.  It's one of the charges leveled most regularly against elected officials, and one of the things that makes Americans so very very fond of our political culture.

On the other hand, being a competent and capable businessperson is typically seen as a significant asset for an elected official.  If a candidate knows business, and understand the dynamics of running a successful business, it's something that gets trumpeted in every campaign ad.  This is particularly true of the folks on the more conservative side of the political spectrum.

Looking at the imploding spiral of political paralysis that threatens to own-goal collapse the integrity of our financial system, I find myself wondering why it is that while conservatives frequently trumpet business as the model for what is best for America, the most conservative wing of our political sphere seems completely oblivious to the dynamics that make for a successful business.

A good businessperson wants to make a profit, sure.  They want to come out ahead.  But what you don't do in business, not ever, not never, is completely refuse to negotiate or compromise.   If you want to land a contract, or get the best deal from a vendor, you might haggle a bit.  But in the long run, you want to establish a working relationship, and to develop a customer base that views your business as resulting in a mutually satisfactory exchange.  It means occasionally compromising on the absolute bottom line.  It means making sure that people come away from an exchange feeling they've gotten a deal, and wanting to continue the relationship with you in the future.

This is not a Tea Party strength.

I find myself envisioning a Tea Party car salesman, sitting on a lot full of Fords, utterly unwilling to budge for a moment on MSRP, no matter what that guy across town has offered.

I find myself visualizing a Tea Party vendor, who pitches a proposal that is undercut by another vendor offering the same service, but who won't sweeten the deal at all.  The proposal is what it is.  Take it or leave it.

I see a Tea Party CEO who in the face of a flaw in the antenna of their companies' latest smartphone just tells people to suck it up.  You bought it.  You know how to make it work.  You'll get nothing more from us.

A business run by Tea Party standards would go bankrupt.  This does not augur well for America.

Econopocolypse

I am naturally a pessimist. Always have been. When I was a kid, my mom's nickname for me was Puddleglum, after the relentlessly dour but redoubtable Marshwiggle from The Silver Chair. As I saw it then, being a pessimist had no down side. If things went badly, well, you right. If things went well, then things were cool and it didn't matter.

Problem is, that doesn't reflect our agency in a situation. Being convinced that things will go badly tends to demotivate most human beings. Focusing relentlessly on the negative has this unfortunate tendency to produce negative results. Yes, we're just "being honest." We're "telling it like it is." But we're also helping to define the direction in which actions will be taken. If all is inevitably despair and woe, then we may as well just sit around muttering moodily to ourselves and chainsmoking unfiltered Camels until the poo hits the fan.

It's true in church, where obsessing over the insurmountability of an issue can paralyze a community. You gotta have hope, seeing the best case scenario towards which we can direct ourselves as a reality that exists fully as a potential future. As my own wee kirk earnestly works to survive, I've starting fighting more against my innate grimness. I will be positive. We do have hope. Because we do. Because I do. Period.

Where I have more trouble is looking at the trajectory of our nation and seeing anything positive. As we fritter away the days, nothing...nothing...is happening to convince me that the United States will be a healthy, vibrant nation in the moderate-term future. We the people are divided and distracted, and that's a problem, because we the people are headed towards bankruptcy. America will default on it's debt, absent some sort of divine intervention. For all of the jabbering on the right about government being the problem, and how we'd be better off without it, the economic impacts of that on all of us will be catastrophic.

None of our leaders are willing to stand up and tell us the economic truth, not one. That truth is a pretty basic one: if you want something, you have to pay for it. But that's not really their fault. It's ours. We don't want to hear it. Politicians can't make the draconian cuts and tax increases that are needed. If they do, or even hint that they might, we run 'em out on a rail. It's the challenge of a representative democracy. This pattern has sustained for decades, and is without precedent in U.S. history. It spells trouble.

I was playing around this morning with a Budget Challenge game over at the website of the Concord Coalition. The Concord Coalition is a group with whom I feel considerable sympathy. They're fiscal conservatives who've been futilely ringing alarm bells about the debt for years. They crafted this little sim to educate folks about the difficulty of reducing the debt. It's no Modern Warfare 2, I'll admit. But it's still important. It's a little budget creation simulation that allows you to measure the impact of every major budget proposal on the debt, and to create your own budget.

Here's the rub. Play the game. If you reject every major budget proposal that increases the debt, and accept every viable option (my Canadian Army option is understandably not included) that reduces the debt, the debt still increases.

There is no escape. You can't win. The simulation is an economic Kobayashi Maru.

I do not find this reassuring. But perhaps I'm being too Puddleglummy. Tell me how you think our nation will get itself out of this mess. Show me the hope.