There is hysteria Inside The Beltway. Unless a budget solution is found, the government will shutdown at the close of day tomorrow. At issue is whether the deficit will be trimmed by $61 billion (Republicans) or $33 billion (Democrats). The difference is about 1.875% of the predicted deficit.
The Republicans say that our government's growing debt is unsustainable in the short-, medium- and long-term. The Democrats say reducing government spending will cause layoffs, cut critical services and slow the "recovery."
They are both right.
Democrats have never met a government expenditure they didn't like. Republicans have also been very enthusiastic about government spending, especially if it involved killing the Infidel. Their enthusiasm waned when the 2010 elections taught them that government-bashing works. Cutting government spending is the magic carpet the Republicans will ride into the White House in 2012.
The public is said to agree that government is too big. Until you ask them, that is. If you ask the average man in the street, he will tell you he wants his social security, health-care payouts, and other miscellaneous benefits. The Democrats are holding firm on budget cuts in the hopes that what the polling reveals about transfer payments will be the magic carpet they will ride into the White House in 2012.
To cut or not to cut—that is the question. One way or another, we can expect many changes in how American society is structured over the next decade. There are basically two choices. Looking 10 years into the future, EITHER—
- America's 30-year transformation will be complete, we will have become a Banana Republic
OR—
- America's 30-year transformation will be complete, we will have become a Banana Republic
Oh, my — I see I have typed the same outcome twice! And that's not because I haven't had my morning coffee yet. That's because these "are" our only choice (sic).
I'm too lazy (or disgusted) to get into the details today—Medicare and Medicaid are the problem—but austerity is coming. It will either be imposed by the international bond market at the point of a financial gun or we will "voluntarily" pare down our government debt in the name of re-expanding the private sector. By the way, there is not a single bit of credible evidence that government spending crowds out private sector investment. I don't see private companies lining up to give food stamps or clothing to the poor, or income to the elderly. The Baby Boomers are retiring, and half of them don't have any retirement savings. It's final demand that counts for investment.
Either way, the New Austerity means massive cuts to the government transfer payments (or other indirect benefits) so many Americans have come to depend on. The poor and what's left of our Middle Class are going to pay a heavy, heavy price. Don't worry about the rich; they'll be alright—just in case you were concerned about that. Withdrawing all that borrowed money from an economy as structurally unsound as ours is going to have catastrophic effects. For chrissakes, we hardly have a private housing market! (Unless you pay cash.) And we won't have one for years to come.
Either/Or, the outcome's the same. If you think I'm being overly sensational and pessimistic, I defy you to lay out a plausible scenario in which America is not a Banana Republic by 2021, is not a country with perpetual bread lines stretching around the block where few can afford health care and the elderly are dying left and right from poverty & neglect. (Remember the effects of inflation on those with fixed incomes.) Not to mention the food & energy bills imposed on those who still have a job and disposable income. If your plausible scenario entails wildly unrestrained GDP growth from now until the End of Time, don't bother to offer it.
It's damned if you do and damned if you don't as far as the eye can see. When I named this blog Decline of The Empire, I wasn't kidding around. Go ahead, shut down the government. Or don't shut down the government. It doesn't change a thing.
Bonus Video—Don't forget to crank it up!
Your lips move but I can't hear what you're saying...
If the government shuts down, Congress and the WH still collect their checks--so why should they care? As for the rest of us, we're either too busy trying to survive or too stupid to understand what's going on. And I bet the politicians are counting on business as usual to keep playing their ponzi schemes whereby the rich get richer and the rest of us get screwed.
Posted by: sharonsj | 04/07/2011 at 10:48 AM