Last week, for those of you who missed it, we hit our legislated limit on debt–about $14.3 trillion. That means we can’t borrow any money to pay our bills. Tim Geithner says that by Aug. 2, we will be in default on some of our obligations. Much like the individual borrower who fails to pay on time, it would mean that our government would probably pay higher interest on money it borrows in the future. It would also undermine the US dollar as a world reserve currency–one that people hold as a safe haven.
Raising the debt ceiling is usually a non-issue. It has been done 70-something times since the law was first instituted in 1917. Most people believe it unthinkable that the US would default on anything. This time is different. Both Republicans and Democrats know full well that our debt level, now 98% of GDP, is unsustainable. Democrats want to raise the debt limit and address the deficit/debt problem later. Republicans want any deal on raising the debt ceiling to come with equal or greater reductions in spending. Who will blink?
I think Congress will do what it has always done–push the problem down the road. They will raise the ceiling, and then do nothing to address to debt. Before you get too disgusted with Congress, though, remember this: The main impediment to addressing the debt is Medicare, and We the People are to blame. Every time Congress talks about tackling non-trivial expenditures like Medicare, voters howl like banshees. I can’t blame them, particularly. I am not happy either about paying into a program that will not survive long enough for me to use.
Alas, though, reality does not care much what I think. We march merrily along, pretending that the Democrats have a heart and Republicans have a brain. Neither is true. Democrats will convince the poor it is their ship, but won’t tell them it is sinking until after they are off. Republicans will put on serious faces and bark brainless orders while radioing yacht owner friends nearby for transport to a safe haven.
We are in charge, but we cover the mantle of our authority with a slave’s garment. We let children masquerading as legislators promise to take care of us, knowing full well that they cannot do so. Then we wail and moan when the truth we avoided all along pushes us into the corner. Sadly, we are all about to taste the bitterness of denial together. Will we learn anything?