The Big Think

October 21, 2013

Response

Filed under: Politics — jasony @ 2:19 pm

Good friend Greg posted a response to my last entry and I wanted to elevate my regular response to a full-fledged post. Greg is a great guy I know who, unfortunately, moved away. Smart engineering type who’s opinion I respect (even when I don’t agree with him). Plus, he brews a mean cider and a positively devastating Hefeweissen. So I was triply sad to see him move.

Props to him, also, for being one of those friends that disagrees with me but is willing to have a good discussion and entertain alternate points of view. Sigh. Miss the guy.

Anyway, here’s my response (see the previous entry for his comment):

There’s a long, long post that I have brewing that would probably better serve as a reply, but a short part of it is this. I have to politely disagree (if what you’re saying is what I think… I wasn’t sure what the “this is mad” part referred to)

Raising the debt limit is fundamentally not like ignoring your credit card bill. Instead it is exactly like getting another credit card. Not paying the debt you already owe is decoupled from obtaining a higher credit limit. The two things are not related at all. If I owe $20,000 on a credit card bill and my interest payments alone are, say $1000/year, getting a higher debt limit does not allow or disallow me from spending the money to pay the bill I’ve already racked up.

When President Obama said that raising the debt limit would not incur more debt he was being overly clever with his wording. It’s true that the direct result of a higher debt limit would not be more debt, but the expected result is that, yes, the government will run up the additional debt and then come back for more (sidenote: what good is a “debt limit” if it is going to be raised every time we come up against it? That’s like saying “this is my household budget” and then ignoring it completely).

But back to the point. There is enough money coming into the treasury to pay off the bills we have already accrued to date (or at least pay off the interest on the loans while we figure out a way to address the principle). Failing to raise the debt limit would not force us into default unless we chose to ignore the bills we already had. Would this be painless? Absolutely not. In fact, I suspect that, if we really had gone past the deadline, we’d have seen the administration use economic strong arm tactics similar to closing the national parks to make it hard on the average American. But, just like in the analogy with a household budget, if you must pay your debt (a Constitutional requirement) then all other bills become secondary (defense, social programs, etc). The bills— or at least the interest on the bills— is at the head of the line when it comes to repayment. It would be the Mother of All Shutdowns but would have the salutary effect of instantly balancing the budget. Just like in a household that cuts up credit cards.

But, distressingly, what is missing in this whole discussion is the bigger point of it all. As a nation we’ve been saying “you can’t kick the can down the road forever” for years and years. Decades. We all knew that someday our fiscally errant behavior would come back to bite us in the backside. But previous generations were comfortable pushing the day of reckoning off into the unknown future, secure in the knowledge that they would be dead and gone before the math caught up to them (Social Security ponzi scheme as a particularly egregious example). So instead of arguing over the particulars of the shutdown we are beginning to hear people stand up and loudly declare “it’s not just about this program! It’s not just Obamacare or Social Security or Welfare or Defense or anything else. It’s that We. Cannot. Afford. Everything. Not even close”.

So.

The math doesn’t allow us to have everything we want. And 100-200 trillion dollars in future unfunded kicked-the-can-down-the-road liabilities are beginning to insist that we won’t be able to have anything we want unless we get this leviathan under control. The math has been positively screaming it for decades and only now is its voice becoming harder to ignore. I have never seen a serious proposal for paying off our debt that doesn’t ask for some sacrifice from citizens. Unfortunately, what we’ve gotten the last decade and a half has been a gigantic expansion of the problem.

So, to come back around to your original point. When someone stands up and attempts, however inelegantly, to force the issue of fiscal sanity by flirting with a debt limit (which could constitutionally still be dealt with) he is derided and shouted down. One side “wins” and the other side “blinks”. The media report joyfully. Ha ha! Problem averted! To the victor go the spoils! Except in this game ultimately it is math that will win. The road is getting very, very short and the can is becoming too big to kick.

You stated “If you want to help fix the problem, deal with it when congress makes a budget.” Except that the Senate has not offered up a budget since April 29th… 2009. (source: http://www.budget.senate.gov/republican/public/index.cfm/budget-background?ID=b630d3bd-f985-4943-a87a-a746ecec6a51). Except once when the President offered a template budget and it was unanimously voted down. Even by his own party. This does not inspire confidence that they’re taking the problem seriously.

I’m not trying to win points or lay partisan blame here. But what I am saying (along with a growing number of voices on both sides) is that we must do something soon. We cannot continue running up debt like this and not expect Very Bad Things to happen (see: every example in history— and we’re orders of magnitude worse in debt than just about every one of those examples were!).

People are positively screaming for a responsible response to this. So far all we’ve gotten is… more spending, no serious budget, bigger entitlements (O-care), and a turbocharging of the welfare state.

When does it stop? If we don’t chose a different path, and soon, a stop will be forced upon us. And it won’t be pretty.

4 Comments »

  1. I mostly agree with all of the above. What I disagree about are the technicalities. Mainly, the mechanism by which to address the problem.

    If we have a government budget that includes large deficit spending (and the stupid continuing resolutions functionally count as a budget, even though they show how dysfunctional congress is), and we have a debt limit that has been surpassed, we basically have two laws of congress in direct conflict. I’m not even sure what that’s supposed to mean, how how anyone is supposed to go about enforcing conflicting laws.

    I think the debt limit at this point is meaningless because by the time we get to raising it everytime, we’ve already committed to spending the post-raise amount.

    I strongly agree that we need a smaller (or zero) budget deficit. But to get there, congress needs to step up and actually pass a budget. They need to make the hard choices. They need to stop kicking the can down the road. (I have very low confidence that this will happen anytime within the next decade or two).

    PS-Thanks for the compliments. Miss you guys!

    Comment by greg — October 21, 2013 @ 4:37 pm

  2. And every time we talk about the budget deficit, let’s remind ourselves that this has *not* been going in a straight line for decades: we have had a balanced budget in our lifetime. We arrived at it after several Democratic and Republican Presidents and Congresses in a row increased taxes and cut spending. We’ve done it before: though I don’t believe it *will* happen soon, I’ll definitely say that we *could* do it again.

    Comment by barrybrake — October 21, 2013 @ 10:17 pm

  3. Greg,

    I think we’re in agreement about the mechanism, actually. I agree with you that we should have a budget, and in a perfect world (or even in THIS world) it doesn’t seem like such a hard thing to make out an annual budget, hash it out, and submit it for approval or veto. In fact, that’s the system that we currently _have_. But recent politics have colluded to completely hose us in that regard.

    You guys coming back to Texas any time soon?

    Comment by jasony — October 21, 2013 @ 11:36 pm

  4. Jason- Not sure when we’ll be back in Texas. We’re expecting a baby boy in February, and that disrupts our travel schedule ever so slightly 🙂

    There’s one other thing I’d like to discuss about the topic at hand, and that’s the role of minority parties/groups/caucuses. Given our form of government, where we vote on things and the majority wins, I’m not sure I approve of the way the government shutdown was handled. The house of representatives had plenty of votes to pass the “clean” budget bill. It just didn’t have a majority of the majority party. I think that even when you’re ABSOLUTELY SURE that you’re right, it goes against the spirit of our form of government to use these tactics when you don’t have the votes to enact the legislation you want. Because the flip side of that is that the other side is probably also ABSOLUTELY SURE that their position is best for the country. History will judge who’s right and wrong. But when we have disagreements, we’re supposed to vote, and go with the majority. I’m getting tired of all these procedural tactics that prevent even voting on bills/issues/whatever. And all parties are guilty of this. I don’t mean this as a stab at the tea party specifically. Example: federal judge nominations under the last two or three presidents have gotten stuck in the senate indefinitely. Even though most have a support of a majority in the senate.

    So there you go. I’m attempting to hijack your blog. Discuss! 🙂

    Comment by greg — October 22, 2013 @ 9:23 am

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