Today I will talk again about this debt ceiling nonsense, but you should start with yesterday's post The Real Significance Of The Debt Ceiling Debate if you haven't already read it. Cleverly disguised as a blog, DOTE is in fact a coherent body of work. If new visitors swoop in, read one post and then leave, as they usually do, they will get no sense of the Big Picture I am trying to convey here. America's decline should be obvious to all, but it is not.
Let's face it, life in the United States has become a nightmare. There is an old proverb which goes like this
In the kingdom of the blind, the one-eyed man is king
Some years ago, I modified this proverb to read like this
In the kingdom of the blind, the one-eyed man is merely an observer
As yesterday's post makes clear, America's public (political) life has become a farce. We live in the kingdom of the blind, which includes both those who manufacture political crises and those who take them seriously. We can only observe The Farce in its various manifestations, see it for what it is, describe it and move on. Which brings me to the debt ceiling charade. Calculated Risk has been particularly clear on this issue.
I've been hearing from more and more people that they are concerned about the debt ceiling negotiations. Many of these people are busy with their daily lives, and they don't usually pay close attention to politics or budget issues.
No worries.
The debt ceiling is about paying the bills, not the deficit. However it is not uncommon for the party in control of Congress to try to use the debt ceiling as a tool to try to negotiate on budget priorities. That is what has been happening.
But at any time Congress can agree to pay the bills, and they will this time too. As Senator McConnell (R) noted this week, if the U.S. defaults, the American people would blame the party in control of Congress - the Republican party - and the "Republican brand" would be forever toxic. The leaders of the party can't allow that to happen, and the are now looking for the exit.From Lisa Mascaro and Kathleen Hennessey at the LA Times: House Republicans brace for compromise on debt
Republican leaders in the House have begun to prepare their troops for politically painful votes to raise the nation's debt limit ... Republican leaders orchestrated a series of public moves intended to soften the blow for conservatives...
If the Republicans were to bring down the government, they would lose all legitimacy. But we learned yesterday (via Orlov's quote) that the debt ceiling debate is a humiliating farce designed to demonstrate the legitimacy of those who wield the power. What is being demonstrated is the power of those in government to do a lot of damage. Therefore, We the People are supposed to take them seriously. However, if they were to exercise that power, and do the damage, they would (paradoxically) lose the very legitimacy they seek to affirm. At anytime the Congress can agree to pay the bills, and they will do so again.
It is instructive to look at the bills that Congress will finally agree to pay. Addison Wiggin of The Daily Reckoning looks at the scenario in which the debt ceiling is not raised.
According to the Bipartisan Policy Center, tax revenue for the 29 days of August after the 2nd will total roughly $172.4 billion. That compares to $306.7 billion in spending.
Ordinarily, the Treasury would cover that $134.3 billion gap by issuing new Treasury debt. But after Aug. 2, it won’t be able to do so. That means Uncle Sam would have to immediately balance his books.
What would that look like?
Well, he’d have to choose his priorities. The Bipartisan Policy Center report breaks down the government’s Aug. 3-31 expenses in a way that shows what the $172.4 billion in revenue can cover… and what it can’t.
The Social Security checks would still be cut… but not income tax refunds. Medicare and Medicaid would be kept going… but not food stamps. Military contractors would still be paid… but not the troops.
They can move certain items above the $172.4 billion line and others below it… but something has to give.
Scary, isn't it? That's the real point of this exercise. You can see exactly how dependent the government is on borrowing, and you can see exactly what might be cut if the government could not borrow. As I suggested yesterday, it would behoove us to pay out the $9.3 billion on Food/Nutrition Services so that upwards of 45 million people don't starve to death. Remember, The Farce is designed to reaffirm the legitimacy of a bankrupt (in every sense) political system. How much legitimacy would the Congress have if its members joined Josef Stalin as the biggest mass murderer of all time?
A truly legitimate political system would have no need to remind us of how much damage it can do, given the astonishing damage it has already done. The day after the debt ceiling is raised, the Fox News/CBS/PBS/NPR/Paul Krugman/Jon Stewart propaganda machine will move on to the next farce. Perhaps you will feel like some long nightmare is over. Was all of the fuss only a Dream? Was any of it real? No, none of it was real. It was a scary Dream designed especially for your consumption. You are a "consumer" of things, right?
Finally, looking at the chart above, you can see that the United States is in a completely untenable position. Taxes on the rich and the corporations will not be raised. The economy will not come roaring back. Revenues will never catch up with spending. Somebody will pay the price. Who? The powerless, that's who. America is not a Just Society. It's not even close to being a Just Society. That's the only possible outcome of 30 years of abject corruption.
The Empire is in terminal decline. Nothing will change this. We live in the kingdom of the blind.
Bonus Video — from the Addison Wiggins article
It's always... invigorating, I guess is the word, to come here. I'm learning a lot, not least that I should have learned a lot of this stuff earlier.
By the way, you missed the best Monty Python exemplar for the economy, which is of course Mr Creosote.
Posted by: fuyura | 07/18/2011 at 10:42 AM