Mr. Steiner concludes: “The sum of all the reported deficits of these five presidents is $4.769084 trillion but the national debt has gone up $9.325885 trillion!”
Note the exclamation point. And remember, Mr. Steiner was writing in 2008. What’s happening now? This April will see the 100th anniversary of the sinking of the “unsinkable” ocean liner Titanic. If you have money to throw away, you can even take a Titanic commemorative cruise, retracing the route of the doomed liner. Or you can just stay at home and watch as the U.S. Economy reenacts the death throes of that mighty ship.
Are you sitting down? Please sit down before reading Mr. Steiner’s article “America’s Titanic Moment.”
There’s a classic sequence near the end of the 1997 movie Titanic that depicts the ship’s sinking.
As the bow of the ship takes on water and slides beneath the ocean, the stern of the ship rises out of the water and ends up vertical. There’s a pause as the stern just bobs there in the middle of the ocean leaving the remaining passengers afraid and confused. Then, after a brief pause, the ship quickly sinks.
As I watch economic and political news unfold, I get the distinct impression that in 2008 the liberal ship Titanic hit an economic iceberg (known as reality) and our economy is now on the stern of that ship, just bobbing around in a dark ocean waiting for what comes next… and many are in denial of what comes next.
It’s difficult to imagine an economic situation more dangerous than the one in which we find ourselves.
What’s happened?
All the debt problems that caused the crisis in 2008 haven’t gone away, they’ve just been transferred to the Federal Reserve or continue to lurk on the balance sheets of banks. Sovereign debt bailouts in Greece, Ireland, and Portugal are exploding.
In addition to out of control federal spending, we have states such as California and Illinois that may go bankrupt or seek a bailout–and both of those states are far larger than Greece. In addition to our huge national debt, we have overwhelming unfunded liabilities of anywhere from $61.6 trillion to $100+ trillion. We continue to bailout other countries via the IMF. And even as our country is collapsing under the weight of debt, we are told that the solution is to increase the amount of debt by raising the debt ceilings.
There won’t be tax increases because taxes can’t be raised enough to solve the problem, they’d damage the already weak economy, and Republicans aren’t suicidal (probably).
Printing money hasn’t worked, and we can’t continue down the dangerous path of printing money without destroying the dollar.
Economic recovery–were it to materialize–would only succeed at postponing the day of reckoning. But a strong economy is no longer sufficient to overcome the structural spending problems we have.
Bottom line? “We can either cut spending now or we can cut spending after the economy collapses.”
President Obama has at least a year an a week or two left in office. Do you reckon he is committed to cutting spending? To ask is to know the answer. George W. Bush spent money like a drunken Democrat, but he was a mere punter compared to Obama and his gang.
But that’s not the really depressing part. The really depressing part is that none of the viable candidates for President—not Mitt Romney, not Rick Santorum, not Newt Gingrich—would do anything substantive to change this. The won’t because the interest groups to which they owe their political lifeblood wouldn’t countenance any serious adjustments to governmental spending. The crisis is not yet severe enough. Sure, our bow is submerged and the stern of the ship is bobbing precariously in the water, but the view from here is just dandy. And who’s to say that it won’t bob here perpendicularly forever? Let the band, what’s left of it, play on.
Writing in July 2011, Craig Steiner issued an appeal for honest, principled political candidates. “What we need today,” he wrote, “is a new generation of candidates that win elections by staying true to their principles and ethics, not by sacrificing them.” What do you suppose the chances of that are? Personally, I am happy that, just yesterday, I revived my proposal for a new philanthropic organization: ThrowTheBumsOut.Org. Those bozos got us into this mess. Now it’s time to get rid of them and start anew.
Excellent article. The fictional Clinton surplus needs to be debunked and the federal government must be forced to adopt real “spreadsheet” accounting: money in, money out, money and interest owed.
We are, as you point out, heading toward a very difficult, painful reckoning.
It is better to give than receive, unless you give other people’s money and receive votes in return. That’s pragmatic politics, in the view of the homo Politicus. We made need an unpragmatic Kamikaze Party to take the necessary measures and go down in glorious flames.
Mr. Kimball: The “surplus myth” argument is incorrect. If receipts exceed outlays, you have a surplus. The federal government had a surplus in every one of the four years 1998-2001. It’s as simple as that. The government’s “borrowing” of the Social Security surplus is an accounting fiction; it “borrows” the surplus from itself, not from workers. As we conservatives have often pointed out, the workers do not have a property right to SS benefits. FDR and Congress deliberately set it up that way, trying to make sure that SS would be constitutional. The Supreme Court at least once has affirmed that there is no property right. So there is no debt that could be the subject of litigation.
By the same token, that part of the “gross debt” which is “owed” to future SS beneficiaries is not owed to them in the sense that they could sue for it were Congress to abolish SS or reduce benefits. Since when can a borrower abolish his debt without declaring bankruptcy? If he could, we could justifiably call his debt “fake debt.” So the SS “debt” is fake debt – just as the SS Trust Fund is a fake fund.
If a person believes that the Trust Fund is a real fund, he will be misled by “Clinton ran surpluses” to believe that Clinton put money aside for future SS benefits. That’s the real deception. The claim that Clinton ran surpluses is true.
Craig Steiner, by his own say-so, is a software developer, not an “economist.”
Uh, no. It is not a fake debt. They actually buy T-bills with the money to move it into the general fund. You and I then pay that back to SS in future taxes to redeem the t-bills.
Sinking of the Titanic
I suggest this quote from the movie Titanic:
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Ismay: (President of White Star Lines): Most unfortunate, captain!
Captain: [perspiring and trembling] Water fourteen feet above the keel in ten minutes. In the forepeak, in all three holds, and in the boiler room six. That’s five compartments! She can stay afloat with the first four compartments breached, but not five!
Captain: (thinking) As she goes down by the head, the water will spill over the tops of the bulkheads at E deck from one to the next. Back and back. There’s no stopping it.
Smith: The pumps… if we opened the doors…
Captain: The pumps buy you time, but minutes only. From this moment, no matter what we do, Titanic will founder.
Ismay: But this ship can’t sink!
Captain: She’s made of iron, sir! I assure you, she can and she will. It is a mathematical certainty.
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I think most people believe that our country can’t sink, no matter what laws or policies are implemented. But, the iron laws of incentive, energy, and economy cannot be abolished. People will not work hard if their income is taxed away. Investors will not risk their money if they cannot make more money. Great doctors will not work in a profession that requires half of their time to be devoted to paperwork at no benefit to the patients.
Caring and Reality
A conversation in San Francisco.
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I pointed out that California and San Francisco were both hemorrhaging money, destroying jobs, and were fundamentally unsustainable systems.
She said “I know, I know. I’ve heard all that. But, you know, I just love it here so much and I don’t want anything to change. Something will come up and it will get fixed. I just have to believe it.”
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