It's amazing how often I'm forced to listen to teabaggers. That is because we are being ill-served by a news media that is populated by idiots who seem to be under the impression that the definition of “objective journalism” is to present all sides of any argument, no matter how stupid and uninformed any one of those arguments is. I’ll get to that in other columns, I’m sure. This column, however, I'd like to clear a few things up about the debt ceiling. Call it a public service to teabaggers.
The debt ceiling is the somewhat artificial barrier Congress put in place many years ago in order to pretend they were being responsible with our money. It is absolutely illegal for the United States to borrow more than the debt ceiling allows. So every so often (more often when Republicans are running things, for some reason), Congress votes to raise the debt ceiling to a number a bit higher than the projected deficit, and Congress may then borrow money at will up to the new limit.
The debt ceiling is once again coming up for a vote, and the Tea Party is chomping at the bit to make a stand on it. They won’t be successful in the long run, but it will be fun to watch the less-lunatic Republicans in Congress hem and haw and stammer and pose just to make the teabaggers happy. That’s what happens when you allow your base to be populated by the most ignorant people on the planet; you are made to look stupid.
And face it, folks; these people are dumb as rocks, and that may be unfair to rocks, since at least rocks have the good sense to simply lie there and not screw things up. As idealistic and naïve as some portions of the far left are at times, at least one has a sense that they can be taught. Teabaggers can’t be taught anything, because they see everything in simple black-and-white terms, and they’re too convinced of their own genius that they can’t absorb anything about which they have not preconceived a notion.
So, last night, I’m watching the news, and reporters were talking about the looming vote to raise the debt ceiling. They spoke to an economist, a couple of politicians and, for “balance”, a Tea Party spokesperson, who came on to tell us all that it’s important to not raise the debt ceiling, because that will once and for all force the government to live within its means, and it will make them cut spending. She had such a smile on her face. It was clear that at least one person in that discussion thought she was brilliant.
Gosh, I wish life was so simple. I wish economics were so simple, you know? But in an economy that was built on debt, and thrives on debt, they’re dreaming.
The total level of government spending this year is roughly $3.7 trillion. The current deficit for this year is estimated to be $1.5 trillion. Cutting that much from the budget would just be stupid and irresponsible. And it would also be impossible, besides.
The first thing I want to ask teabaggers, though is this;
Where were you for the first eight years of this century, when the party you glommed yourself onto were running the debt up, and WE were screaming about it, and warning of the dire consequences should it continue? You people couldn’t get enough of George Bush and Dick Cheney for eight years, even though the whole time Cheney was telling us “Deficits don’t matter.” For 30 years, we’ve been telling these clowns in the Republican Party that deficits do matter, and we should be careful not to run up too much debt, and the whole time teabaggers dismissed us as crazy.
Now, all of a sudden, with a Democrat in the White House and the economy recovering from a major mess in which millions of crooks stole trillions of dollars from us, NOW they’ve decided the deficit is too high, and the government must be forced to “live within its means.”
See, the way government is supposed to work is, when the economy is going gangbusters, and there is enough of a revenue stream out there to take some without hurting anyone, you should collect more than enough money to keep things running, without having to borrow any. Maybe put a little away for a rainy day, too, since rainy days come to everyone (except for one small region in Peru).The time to borrow money is when the economy’s way down, and you need to boost it back up. You know, like now. See, adding $3-4 trillion to the debt over 3-4 years wouldn't be so bad if the previous administration hadn't already added $7 trillion.
I do agree with the teabaggers in the abstract; the level of deficit is not great, and the level of debt we are carrying is troublesome, which is why I was complaining about it when people were making tons of (what turned out to be fake) money while Bush was president. But the deficit, which is about 10% of GDP, isn’t as bad as it could be or has been at times. And while the debt is currently at about 88% of GDP, at the end of World War II, it sat at 120% of GDP, so even that level of debt is not unprecedented, and is surmountable, with a rational economic policy in place.
But the teabaggers contend that the current deficits are somehow related to spending. They think that forcing the government to balance the budget will force it to stop spending money, which is completely absurd. When you adjust for inflation, remove the two unnecessary wars, and factor in the increased unemployment-centered expenses, the government isn’t spending all that much more now than it did in 2001. Why is that date significant, you ask? That’s when Democrat Bill Clinton left Republican George W. Bush and the Republican Congress a balanced budget.
So, if the government isn’t spending all that much more, why is there a such a large deficit?
The answer is simple; revenues are way down. You see, deficits aren’t just caused by spending; they’re also caused by a lack of revenue to cover spending. One reason revenues are down is because of the Great Recession. Lots of people became unemployed, and lots of taxpaying businesses have gone under. Meanwhile, because of policies enacted by some of the same Republicans who’ll make hay about the debt ceiling, a lot of very rich people and corporations are paying no taxes on their money.
It is simply not possible to cut spending enough to wipe out the deficit, anyway. Social Security and Medicare should be off limits altogether. Everyone pays specific taxes to those programs, and those programs are fully funded, with a surplus. So they shouldn’t be touched at all. We could and should cut a lot of defense spending, but cutting most of it outright would actually lead to a higher deficit, because people work to make those unnecessary planes and weapons systems. Just killing those programs would eliminate hundreds of thousands, if not millions, of taxpayers from the rolls. If we’re going to cut, we should cut and replace. One idea I had was to cut a few weapons systems and retrofit the plants to make wind turbines, solar panels, batteries, or things like that. That way, we’re investing in things we need, and making the country safer at the same time. After all, isn't that what defense is supposed to be about?
There simply isn’t enough budget to cut to make spending the focus of deficit reduction. Instead, we should be spending more money on infrastructure investment, which is an would pay huge dividends over the years, in the form of more businesses, jobs and taxpayers, which would reduce the deficit faster than anything.
Any pretend benefits of not raising the debt ceiling that teabaggers imagine would also be more than offset by the detrimental effect to the economy. It’s estimated that we’ll reach the current debt ceiling about mid-May. The Treasury has some contingency plans in place that could keep the country solvent until about Independence Day, but after that, we would default.
People who read this blog know me. I’m a glass-half-full progressive. I don’t talk about gloom and doom very much. But failing to increase the debt ceiling would be an unmitigated disaster. Let me explain this without all of the mumbo-jumbo economists throw at you.
You see, folks, the government gets a lot of money from its revenue stream, but it doesn’t get it all at once, as you can see if you look at your paycheck. They get their money slowly, throughout the year. But bills don’t always come due at the same time, as you well know. So, even if the country had a balanced budget, it still has to borrow money throughout the year to pay its bills to get by, with the promise that it’ll have the money to cover before the end of the year. Think of it as a credit card that you pay off every month. You may not have the money to buy groceries or fill the gas tank right now, but you know you will in a couple of weeks, so you use the card and pay down the balance before you get his with interest payments.
Without the ability to borrow money, the government can’t pay its bills. If it can’t pay its bills, it defaults.
If the United States defaults, the value of the dollar will drop like a rock. That’s not only significant for those preparing a trip to Europe or Asia, by the way. That, combined with the high interest triggered by the sudden shortage of dollars, and the unavailability of credit to businesses, would also cause a round of hyperinflation like we have never seen before. Remember the 1970s? Double or triple that. If the value of the dollar drops by a third, expect prices for goods from abroad to at least double in price. And since only cash-rich businesses could afford to stay open, expect the largest round of busts and layoffs ever. Not only that, but the stock market would crash almost immediately, meaning any savings you once had would be vaporized in a matter of days or weeks. Oh, and those banks you hate so much? You won’t get your money out of them, either. The FDIC and FSLIC don’t have enough on hand to pay off every single account in the country, and they wouldn’t even be able to borrow the extra. Remember?
Far fewer taxpayers, far fewer dollars available, and a government forced to stick to the money it has on hand?
Can you say “Instant Third World” country?
I’m certain there are enough cool heads even on the Republican side to prevail on this one, and raise the debt ceiling to cover the next few years. But teabaggers are too simple-minded to grasp these concepts.
Once more; the current deficit is not being caused by government spending; it’s being caused by an unsustainable tax policy in which people without money are being asked to pay so that rich people and large corporations can have lower tax rates, and by the fact that the great mortgage meltdown has left us with too few taxpayers.
Fix those, and you fix the deficit. Anything else won't work, so it's pure crap.
