In agreeing to this deal, Washington’s elites have just made a bet they had no right to make. It’s one thing — a very, very bad thing — to leave mountains of debt and trillions in obligations to future generations, semi-secure in the knowledge that American ingenuity, innovation, and effort will nevertheless make their world better than ours. After all, it has worked that way ever since World War II. It’s another much worse thing to literally bet that we can survive with Barack Obama’s breathtakingly irresponsible spending-on-steroids version of business as usual until late January 2013 — or, heaven forbid, 2017. Virtually nobody in Washington or the media elites, including center-right outlets which should know better, is asking whether we can. Either that, or they don’t dare bring it up.
In late April, I contended that America would become “Maxed Out” — i.e., that it would lose its ability to borrow or would only be able to do so at exorbitant interest rates — in about six years. It’s not unreasonable to believe that it’s now more like two or three. Friday’s GDP adjustments alone probably shaved off a year. The debt deal’s near-term savings are little more than a rounding error. Obama’s clear intent to not let anything get in the way of his regime of fear and fright is likely worth another two or three. His posture virtually ensures continued ratings agency skepticism, economic underachievement, anemic growth, lagging tax collections, and an unrelenting job-market nightmare until 2013 — possibly a few months earlier if the businesspeople, entrepreneurs, and investors who could be driving the economy but are currently, as Resorts International CEO Steve Wynn recently put it, “sitting on their thumbs” until Obama is gone, conclude that the next president will be a legitimate supporter of capitalism instead of its most diehard opponent.
The debt deal assumes we can spend the next 18 months driving headlong towards the cliff at 74 miles per hour instead of 75, and that we’ll still be able to put on the brakes in time before heading over it.
How can Washington’s establishment be so sure that we have that much time? They can’t be.