Well, we're still here. We dealt with a little of the taxing issue, but there's still a lot to do. We finessed on some of the major problems, leaving their solution to the new Congress, although it's not clear that they won't delay a decision and kick the can even further down the temporal road. As for the taxes, the President got nearly all he wanted even though he raised the threshold for increasesi a little. But the “one percent”ii won't be able to pay off the National Debt.iii Unfortunately that debt is increasing all the time, and one of the upcoming debates will center on it – its size, the need to increase it, how much, and how will we ever pay it back. And the President has vowed not to compromise on that issue.
So I've decided, in a series of essays,iv to oversimplifyv the situation we're in and to suggest some solutions for consideration. It doesn't seem likely that any of them will be attempted since no one will read this, and I'm not going offer my brilliant ideas to politicians who have already shown their inability to do anything other than to make the hole in which we find ourselves even deeper. It's their problem and they have to solve it.vi
In today's offering I'd like to summarize the factors that have contributed to our current dilemma – to try to figure out how we got this way. It doesn't take a Nobel Prize winner in Economics to determine that we have a problem.vii We spend more than we have or take in. That leaves us with a debt.viii That's not complicated. If we handled our personal finances this way the banks would have foreclosed on us long ago. It would be Chapter 11 writ large.
CHAPTER 11
Like that. There. I feel better.
But the government's credit rating is better than ours. Theyix can borrow whatever they see fit, as long as they stay within the credit limit. And if there is a threat of needing more, they can simply raise that limit or print money to pay it down. Of course the latter solution means that the value of our savings will go down since, with more money in circulation backed by the same assets, that's the inevitable result. But we won't have to do that if we raise the debt limit. That, however, means that we taxpayers will owe more. Heads you lose, tails you lose. And because raising the debt limit can go on for a long time, your losses will continue to increase.
But that can't go on forever. Greece has shown us what can happen. If you were dealing with your own assets, your creditors would have taken them from you. And that would be disastrous, but it would stop you from continuing your profligacy. You'd have to work out a way to make the balance sheet balance. The government may not have to do thatx but you do. Fortunately there are some bankruptcy laws that will help you start over, but with your credit rating damaged.
So that's the problem we must solve. And I'll offer some proposals beginning next week. They won't be in any logical order (except the first couple – sort of) – not by feasibility, not by the amount of money concerned, and certainly not by popular appeal. But the hole is deep and getting deeper, and no possibility should be overlooked.
See you around the quad.
Next episode: “Paper And People” – A start at lowering costs.
i Actually it's the expiration of a “temporary” lowering of taxes rather than a rise from preexisting levels. Either way, it was a clear victory over the Republican-controlled House of Representatives. Raising the number may have given the Republicans a way to save face, but they were clearly the losers in this fight.
ii Full disclosure: I'm not in the one percent. Even so, I know that they can't handle our bills.
iii Even if the number wouldn't have been changed the problem wouldn't have been solved, but this was a face-saving solution for the Republicans and, when the debt keeps increasing as it surely will, the President can blame the opposition for not giving him all he had demanded. In fact he'll be better off with a scapegoat remaining.
iv I have no idea how long the series will be, or whether the essays will be consecutive. (Probably not.) I'll continue as long as I can come up with hare-brained (apologies to the Easter bunny and all his kin) ideas for dealing with our economic problems.
v This is a version of Cliff Notes after all.
vi In reality it's my problem. And that of every other taxpayer. We, or our descendants, will eventually have to foot the bill for our government's folly. We'll also have to pay the salaries and support the benefits packages of those who have created this situation.
vii Nor newspaper and other political spin artists and the public who tell us that it's all the fault of the one percent (and most of them have bought lottery tickets so they can be in that group) or the rich (who only care about themselves) or the Republicans (who only care about the rich and the NRA). And everyone knows that President Bush got us into this mess.
viii In order to have some perspective on the size of the debt, look at http://www.usdebtclock.org/ It's complex, but you'll be able to get an idea of where we are.
ix Whoever “they” are. I usually think of the government as kind of anonymous and faceless plural. It's big enough and seemingly not answerable to anyone.
x For the present.
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