Well, the shutdown is over… and I’ve never been more bummed that one of my predictions turned out exactly as I forecasted- right down to the results, the manner in which it played out, and the time that it would. The debt limit has been raised again. Now, I’m not judging; I’ve done it before. I spent years living above my means. I wanted something I couldn’t afford, so I opened a credit card. And when I ran out of borrowing limit, I raised the limit. I kept making the minimum payments and I kept raising the limit until I realized that I had acquired more than 3x the amount of my monthly income on credit cards alone, and I had no way to pay it back in the foreseeable future. That is where the country is at now. Don’t get me wrong: a little bit of debt is healthy; it builds your credit, teaches you to plan financially, it moves the economy, and it gives you a little ICE (in case of emergency) padding. But we all know you’re not supposed to borrow more than you can pay. And if you need to borrow more money to pay on what you currently owe, you are already fucked. But that is exactly what our government been doing: paying our existing debt using new debt.
Funny thing about it all is, the recent hype over Congress’ reluctance to raise the debt ceiling and the “inevitable resulting default on our debt” was actually manufactured by the government itself, and gleefully sold to us by the media. The President’s Office of Management and Budget this year budgeted 223 billion for the net interest on the national debt. Keep in mind that revenue from income taxes alone equals nearly 1.7 trillion… in other words, more than 7 times the amount we need to make those payments. Refusing to raise the debt limit again does not mean auto-default; it means making tough, sometimes unpopular, budget cuts so that we can pay back what we already spent. Sort of like when I chose not to buy a new couch just yet, sold my bright, shiny, high-efficiency washer/dryer set, and decided to lose weight instead of buying new clothes—because frankly, it was more important to pay off my debt than to keep living large. Now, there were some things I really couldn’t cut: I signed a lease where I promised to pay rent for one year; sort of like how the government took social security out of people’s paychecks for sixty years. They promised to give it back, and that they must do. [note: I wouldn’t count on it]. But there was an awful lot in that budget I could –albeit painfully- remove.
Ironically, we were actually warned about this 150 years ago by a remarkably prescient Treasury Secretary, Salmon P. Chase. I did a little exploring back when I worked at the Treasury Department, and discovered a gold mine of information in its private library. One month I checked out the original financial reports from 1861-1865… after dusting off the parchment, imagine my astonishment to find our country managed to balance the budget and pay its debts while fighting a war against itself. These annual reports always end with remarks by the current Secretary of the Treasury (more likely written by staffers today). I wish I could still access the library and give you the word for word account, but translated into modern language, his remarks went something like this: “Do not stay in the red year after year. Do not stay in the red year after year. Do. Not. Stay. In. the. Red. Year. After. Year.”
It’s simple but sound financial advice, something we’re in dire need of from our Treasury Secretary today. But what are we getting instead?… Political ass-kissing and blatant, bald-face lies about the country’s financial situation.
The first time I got in over my head on my credit cards, I was bailed out by some amazing, well-meaning parents. I didn’t learn my lesson. So when I made the mistake again, it took me 4 tough, rigid, well-budgeted years to dig myself out. When Europe got in over its head, we bailed them out. When they did it again… well, now they’re all arguing over how to bail each other out as they crumble under the weight of an unsustainable system. Make no mistake, we are next. My question is… who is going to bail us out? Think about that for a second, and then ask… do we really want them to?