The recent agreement to again raise the federal debt limit has made no one happy. Liberals are unhappy with the idea that unending borrowing and spending might soon be over; Conservatives are miffed that they were unable to impose steeper cuts in federal spending as a condition of agreeing to yet another binge on our national credit card. Neither party was going to get exactly what they wanted in our closely divided government, but a deal was reached and a default was avoided—for now.
This compromise will keep the wheels of government creaking along for a few more years, which could buy us the time necessary for America’s voters to decide whether we prefer national insolvency or draconian cuts to government programs in the very near future.
Our federal government today is an illusion plastered on top of a scam. The idea that government can protect us from all wants and hardship is the illusion employed to win votes from the gullible. The scam is the decades-long refusal to reconcile tax revenues and outlays, which has resulted in an extraordinarily stupid strategy of continually escalating public debt while ignoring of the inevitable consequences of living many, many trillions of dollars beyond our means.
The jig, as they used to say in old gangster movies, is up, and we now need a broader political compromise to deal with our massive and unsustainable government debt.
The first and most crucial political, social, and economic problem is that all that debt has funded an incredible number of well-paying government jobs, and eliminating a great many of those jobs is going to both crash our economy and lead to a stupendous amount of protest that is going to tear our nation apart.
At the present time, the federal workforce has roughly 2.1 million civilian employees. Imagine what would happen if, for example, a third of those jobs, roughly 700,000 positions, were expeditiously and ruthlessly eliminated through consolidation, program closures, and out-sourcing. Then imagine, if you will, that the number actually needed to begin to right our ship of state is closer to one million job cuts—none of which is ever coming back.
The economic impact of both the direct loss of those jobs and the ripple effects of lost household income washing through cities and communities would be unprecedented. Just as so many American cities are now dealing with the fallout of millions of workers switching to remote jobs and turning many previously bustling downtowns into windblown abandoned zones populated by drug addicts and homeless people, Washington, D.C. and its ring of affluent suburbs, which includes many of America’s richest zip codes, would suddenly be dealing with an economic atom bomb—and those exceedingly desperate former federal employees would understandably strike back with every tool at their disposal.
The second problem is a simple yet profound one: We are a rapidly aging society that is dependent upon the dwindling assets of Social Security and Medicare funds for our very survival. Social Security alone is the largest single expenditure of our federal government, and with Medicare (as well as Medicaid and the Supplementary Nutritional Assistance Program) adds up to an astounding 65% of annual federal spending. Any effort to trim federal spending on these core entitlements and cut down on our borrowing costs is going to crash into a demographic stone wall—and make the protests of suddenly unemployed federal workers seem inconsequential by comparison.
Worse still, every unpalatable reduction in benefits will quickly be offset by the continued yearly growth of retirees in need of monthly checks and medical care. Over the next few decades America is going to turn into the largest retirement community and hospital in the history of civilization—this is a guarantee.
Raising taxes by noodling around the margins of the federal tax code will not solve the problems we now face; the size of both our debts and future obligations will preclude that. The liberal mantra of “tax the rich” makes for good politics, but it neatly overlooks the fact that snatching a few billion dollars here and there doesn’t solve a $30 trillion catastrophe that is growing every minute of every day. The hole we have dug—and continue to dig—cannot be repaired with a few spoonfuls of cash.
Which brings us back to reducing the expense of government.
Defense spending, which also is a major budget item, is often blamed for the problems today facing us, and there could certainly be some cost reductions possible, but the military has its own growing retiree obligations in terms of pensions and medical care for veterans, so these cuts will also be difficult and painful because we have a sacred obligation to protect those who protected our nation. Moreover, the hi-tech weaponry needed to protect our nation is stupendously expensive and complex, and we dare not falter in the face of the many military threats now facing our nation and allies.
In the short term, we cannot afford the federal government we now have, and brutal cuts are inevitable, so the first question is whether we make the necessary reductions in the size and scope of government for ourselves—or take the stupid and cowardly route by waiting for a fiscal apocalypse to do the job for us. The second—and perhaps more important question—is whether Democrats and Republicans can possibly cooperate to do what must be done before it is done for us by the cruel and implacable logic of arithmetic.
Democrats, who fancy themselves the party of compassion, will certainly argue that every necessary budget cut is an act of violence against one group of victimized people or another and will refuse to work with Republicans to do what is necessary to avoid the default that is inevitable unless radical action is taken right now. Republicans will also be prone to try to protect their constituents from the harm that must surely follow the enormous benefit and program cuts that are now necessary, and it is likely they will make their last stand resisting the deep cuts to defense spending that will likely hollow out our military capabilities—and embolden our enemies.
None of this will be either easy or painless. However, in the final analysis, this is necessary surgery that will need to be done without the anesthesia of magical money printing and fantasy economic theories. Political cover will be scarce for both Democrats and Republicans when they are forced to take a fiscal chainsaw to the bloated and rotting body of our federal government, and the misery will certainly be shared by state and local governments who have long counted on their profligate Uncle Sam for ready cash to plug their own budgetary holes.
We will, of course, need an entirely new breed of political leadership to save us from ourselves because the gerontocracy now entrenched in our Executive, Legislative, and Judiciary branches of government is captive to the disaster they have created and the special interests that put them in their seats of power. These are people who have built their careers and enriched themselves through the dysfunctional auspices of the irresponsible status quo they serve. Much like the Commissars of the old Soviet Union, their ideological blinkers render them incapable of the bold thinking that will very soon be necessary to save America.
Because our election laws are designed to protect incumbents and punish outsiders, it is reasonable to question whether we can elect the leaders we will desperately need just a few years from now. It is also an open question whether our nation’s voters, long accustomed to money raining from the skies, will elect leaders who promise only a grim and difficult future for many.
My suspicion is that we are facing an ugly reckoning that will be made still more difficult by those who will seek their fame and fortunes by continuing to promise what we can no longer presume to deliver. Truth is never welcome when the truth is dismal, so the empty words of hucksters will still be welcomed by those who worship government spending the way that our ancestors once worshipped God. Understanding that humans will always crave an all-powerful protector, it is reasonable to assume that the reluctance to abandon the Temple of Easy Money will be an impediment to change.
Change, however, is coming: very, very big changes that will forever alter our country and irreversibly shrink the enormous footprint of government in our daily lives. Whether for good or ill, the door of one era of American governance—a stupendously profligate one—is rapidly closing, and a new dawn for our nation and people will soon be upon us.