Default,” Dear Brutus, is not in our stars, but in ourselves, that we are underlings.” Shakespeare might be annoyed that I borrowed and corrupted his line from Julius Caesar, but he’s dead. “Default” is the power word of the week as statists scramble to coerce Congress into supporting an increase in the national debt ceiling limit. The dirty truth is that default is not a Constitutional option. Current monthly income for the federal government is just under $200 billion. The primary obligation for the Treasury is to pay the debt service first out of any collected proceeds. At current interest rates, the monthly cost for interest on the $14.4 trillion obligation is slightly less than $30 billion. In addition, the secondary Constitutional obligation is payment of Social Security benefits due to the hypothetical, mythical “trust fund.” Those payments run about $60 billion. It is clear, therefore, that the two Constitutionally-mandated disbursements will leave a balance of roughly $110 billion in the Treasury for prioritizing other outlays and payments such as military pay and civilian work-force payroll. The threats of impending doom, and starving grannies are gross misrepresentations…..lies.
If, for any reason, Obama or Geithner delay the Constitutionally-required disbursements for political purposes, they will be in contempt and should be subject to impeachment. Whatever they choose to do, legal or otherwise, the debt ceiling is a two-edged sword for the nation. While it is true that federal cash flow is sufficient to satisfy Constitutional and legal requirements, the massive size of the debt makes it politically difficult to lower taxes enough to generate an economic boom. Some will continue to argue that taxes must remain at present levels (or even higher) to raise funds for debt retirement. Given the history of debt service in the United States, this may be a bogus argument driven primarily by ideological considerations. No principle payments have been applied to the national debt for 51 years, so it seems rather remote that the government would feel compelled to pay down the outstanding balance. Certainly debt retirement would be beneficial for the fiscal health of the country because every uptick in interest rates would require billions of dollars more from the budget.
The debt ceiling and the debt itself are constraining in another way. It may create an artificial endorsement of the status quo on the spending side of the ledger. The political class may perceive the debt limit as defining the outer parameters of the spending matrix. They may convince themselves that as long as they stay within the defined limit, their appropriations are justified and defensible…no matter what the value, constitutionality or justification for a particular program or line item may be. A similar concern is that with the artifice of the debt ceiling in place, career politicians will be continually seeking to increase or looking for ways to circumvent it. Pet programs represent political promises for favored constituent groups. The political class will be fearful of returning the government to its Constitutional structure. They will fear the retribution of recipient groups who have become accustomed to government benefits. Concurrent with addressing the debt crisis and drastically reducing federal spending, the nation, people and politicians, must unite for the “weaning of America.” We must insist and enable the drying of the Nanny teat.
The kabuki dance that is taking place in Washington at this time is merely a small beginning toward what must be done. Systematic and reasonable spending reductions must be implemented to prevent a repeat of the current fiasco. The cuts should be vertical reductions with entire departments, programs and agencies being eliminated. Horizontal cuts are easier because they will not generate the furious responses of the affected agencies and their constituencies, but they are not effective and enduring. Merely shaving dollars from the top of every aspect of government leaves the monstrous apparatus in place to fight for restoration of money in the next and all subsequent budgets. It might be useful (and proper) for Congress to become familiar with the enumerated powers in Article 1, Section 8 of the Constitution of the United States. Even if they ignore their legal limits, they may at least attempt to fund only governmental functions that are relatively close to meeting Constitutional muster. I can hope, can’t I? We the people should commit to allowing some favorite programs to be cast aside if we are to work our way out of this fiscal maze. Now is the time for that “shared sacrifice” that the progressive-statists are so fond of demanding. Every American must be willing to sacrifice some program or agency on the altar of budgetary sanity and economic reality. Shared sacrifice, indeed, but I suspect the lefty crowd will battle openly…and underhandedly every attempt to restore order to our nation’s financial chaos.
Our situation is dire. Personally, I’m unconcerned if the Chinese pass us as the preeminent economic power in the world. It suggests that their billions of people may be on the cusp of experiencing some semblance of individual liberty. I do desire that we put our fiscal house in order so that liberty and prosperity will be available for all of our people. Default, dear Brutus, can be brutal. Correction will be politically, economically and socially disruptive. Each of us must be dedicated to the task. Et tu?
