Monday, July 25, 2011

The debt-ceiling debate is just the start of what we have to take on

Mark Steyn, in his own inimitable manner, exposes how bizarre it is that we're getting all worked up about today's debt-ceiling debate when we're really only cracking the surface of what needs to be done to turn our system around so it won't all crash.
Blockbuster went bankrupt because it was wedded to a 1980s technology and distribution system. In government, being merely a quarter-century obsolete would be a major achievement.

The ruling party in Washington is wedded to the principle that an 80-year-old social program is inviolable. That's like Blockbuster insisting in 2011 that there's no problem with its business model for rentals of silent movies with live orchestral accompaniment.

To be sure, there are some problems parking the musicians' bus in residential streets, but nothing that can't be worked out.

But "political reality" operates to different rules from humdrum real reality. Thus, the "debt ceiling" debate is regarded by most Democrats and a fair few Republicans as some sort of ghastly social faux pas by boorish conservatives. Why, everyone knows ye olde debt-limit vote is merely a bit of traditional ceremonial, like the Lord Chancellor walking backward with the Cap of Maintenance and Black Rod shouting "Hats off, strangers!" at Britain's Opening of Parliament.

You hit the debt ceiling, you jack it up a couple trillion, and life goes on — or so it did until these GOP yahoos came along and decided to treat the vote as if it actually meant something.
We're on a trajectory that must change or we'll be searching for a bailout and there will be no one left to bail us out. Check out this chart that shows, without any change in our current tax and spending policies how there won't be any money left over for discretionary spending a decade from now.
And the Democrats are fighting fast and furiously to stop any change to Medicare or Social Security. They're not stupid people. They know the hole we're in, but they're willing to sacrifice our future for some temporary gain in the polls today. And don't buy their story that we need tax increases to make all the math come out right. As Michael Pento at Forbes explains, there aren't enough possible taxes out there to fix our problems.
And then there is the deception coming from Democrats who argue that we need to raise taxes in order to balance our budget. This is simply not possible. The American economy currently produces nearly $15 trillion in GDP per annum but has $115 trillion in unfunded liabilities.With a hole like that, no amount of taxes could balance the budget. Raising revenue from the 14% of GDP, as it is today, to the 20% it was in 2000 would barely make a dent toward funding our Social Security and Medicare liabilities. Therefore, we need to cut entitlement spending dramatically. But the Democrats refuse to face the obvious facts.

As Steyn warns us, we'll have to face the misery some time and the sooner we face up to that reality, the better.
You begin to see why the Europeans are a little miffed. They're passing austerity budgets so austere they've spawned an instant anti-austerity movement rioting in the street — and yet they're still getting downgraded by the ratings agencies.

In Washington, by contrast, the ruling party of the Brokest Nation in History has no spending plan other than to plan to spend even more — and nobody's downgrading it.

Well, don't worry. It's coming. The domestic media coverage of this story has been almost laughably fraudulent.

To the court eunuchs, a failure to raise the debt ceiling by a couple of trillion would signal to the world that American government was embarrassingly dysfunctional.

In reality, raising the debt ceiling by a couple of trillion without any spending cuts would confirm to the world that American government is terminally dysfunctional.

In the debt-ridden treasuries of Europe, they're talking "austerity." In the debt-ridden treasury of Washington, they're talking about more spending, with Kathleen Sebelius touting new women's health programs to be made available "without cost."

At the risk (in Samuel Johnson's words) of settling the precedence between a louse and a flea, I think Europe's political discourse is marginally less deranged than ours. The president is said to be "the adult in the room" because he is reported to be in favor of raising the age of Medicare eligibility from 65 to 67.

By the year 2036.

If that's the best offer, there isn't going to be a 2036, not for America. As the Europeans are beginning to grasp, eventually "political reality" collides with real reality. The message from a delusional Washington these last weeks is that it won't be a gentle bump.
Obama is already talking about the spending he'd like to be doing instead of having to waste time with getting a debt ceiling increase. Spending federal money is fun; having to cut it...not so much. Having to deal with those nasty Republicans is also no fun. As he told his townhall groupies the other day, he'd prefer not to have to deal with them and just make decisions on his own. Of course, he could have raised the debt ceiling any time in the past two years when his party controlled both houses; they just thought it was better to make the Republicans have to be part of the deal. Not that they wanted the GOP to actually have anything to say about the deal, just share blame. Gosh, that whole divided government thing is a pain, isn't it?

If we're irritated about this summer's debt ceiling debates, just imagine how much fun it will be in about 10 years when we're taking in revenues that are only enough to cover the mandatory spending and there's nothing left for all those discretionary items.