Sometimes bad news can be good news.
For example, maybe you’ve heard that our country is likely to smash through another debt ceiling this autumn. “Partially due to lower than expected tax receipts, the nation could reach the $16.4 trillion debt limit as early as late November, according to an analysis from the Bipartisan Policy Center,” The Hill reports.
That’s bad news for sure. It was just last summer that the U.S. government owed only $15.4 trillion (give or take a few billion). That extra trillion sure added up quickly. As an aside, if you counted one dollar per second, it would take you some 31,000 years to reach a trillion. Luckily, our federal government can spend money much faster than that, or else we probably wouldn’t even know what a trillion was.
Still, this bad news could have a bright side. As Andrew Malcolm reports at IBD, last year political leaders in both parties thought they’d, “bought enough time for the country to get through this fall’s presidential election before the next big debt-spending confrontation over raising the national limit.”
If the debt limit comes up in, say, September or October, that’s good news. Our political leaders would have to explain what, if anything, they intend to do to reduce debt. Then Americans would have the opportunity to vote based on that information. And that should be the entire point of having elected political representatives. They should, on the big issues of the day, pay attention to the will of the people.
Of course, that raises its own problems. What if what the people want is for the government to keep borrowing and borrowing to “give” them more stuff? That becomes a big problem, and it explains why the government can ring up trillions in debt so quickly.
“When you borrow a lot of money to create a false prosperity, you import the future into the present,” journalist Michael Lewis wrote in 2009. “It isn’t the actual future so much as some grotesque silicon version of it. Leverage buys you a glimpse of a prosperity you haven’t really earned.” He was writing about Iceland’s fiscal collapse. But it seems like an apt description of the U.S. government as well. Except our federal debt is exponentially larger than Iceland’s debt was.
Lewis adds that the debt has several meanings. “When people pile up debts they will find difficult and perhaps even impossible to repay, they are saying several things at once,” he wrote last year in Vanity Fair. “They are obviously saying that they want more than they can immediately afford. They are saying, less obviously, that their pres¬ent wants are so important that, to satisfy them, it is worth some future difficulty. But in making that bargain they are implying that, when the future difficulty arrives, they’ll figure it out.”
The problem is that you can’t just “figure out” $16.4 trillion. It’s more money than any entity has ever owed. Luckily, since our government (unlike a mortal) never has to die and go away, it never has to completely pay off its debt. But it does need to show it’s serious about paying down some debt, so those with money to loan will believe they’re likely to get repaid and won’t insist on higher interest rates.
At the same time, we need to consider the bigger problem.
Our government’s debt isn’t simply a matter of overspending. “The fiscal brokenness of America is merely a symptom,” author Mark Steyn said on C-Span this year. “What is horrible about big government is not that it debauches a nation’s finances. Ultimately, it corrodes the soul of a people.” By promising to “give” people social programs such as health care or food stamps without requiring any work or commitment in return, the government creates a dependent class that needs Uncle Sam to maintain its lifestyle.
So the question is: Are Americans too far down the road to corrosion already? Lewis hints we may be. He notes that in 2005, Californians voted on four referenda to limit the size and scope of state government.
“All four propositions addressed, directly or indirectly, the state’s large and growing financial mess. All four were defeated; the votes weren’t even close.” Lewis writes. “[L]egislators now knew that the people who had elected them to behave exactly the way they were already behaving were not going to undermine them when appealed to directly. The people of California might be irresponsible, but at least they were consistent.”
Is the same thing true nationwide? The good news, and maybe bad news, is that we may find out in November.