A moment of truth on U.S. debt
By John Browne
Published: Saturday, Jan. 12, 2013, 8:56 p.m.
The Washington-based Bipartisan Policy Center predicts that the federal government might be unable to pay all of its bills as early as Feb. 15.
Steven Bell, the center's senior director, said: “We have less time to solve this problem than many realize.”
The fact is the pending debt ceiling negotiations may possibly be the most defining point in decades for the economic future of the United States and its social welfare programs.
In order to secure the continuation of their political careers, politicians of both major parties have expended vast sums and promised even larger amounts of money while paying scant regard to the funding of those obligations. The realities of the true costs were disguised by increases in Treasury debt and dollar debasement that exploded once President Nixon removed the last link of the dollar to gold in 1971.
Other disguises included unabashed manipulation of bond markets and interest rates and by changing the assumptions, or “doctoring” downward, key government statistics such as unemployment and inflation levels. The latter had the effect of falsely portraying an increased level of economic growth.
The careers of most incumbent politicians benefited greatly from these grave economic deceptions. Indeed, as the economy and dollar have declined, the salaries and benefits of politicians have increased markedly.
The Treasury debt ceiling was established to prevent a spendthrift government from encumbering Americans with unbearable levels of debt. As a matter of responsibility, Americans benefiting from government funds today should think of the debt devolving to their children.
According to the Census Bureau, there are about 100 million Americans 18 or younger. The Treasury debt of $16.4 trillion encumbers each child with $160,000. When you include all unfunded government obligations such as Medicare and Social Security, actual or moral debt obligations exceed $120 trillion. This imposes a moral debt obligation of about $1.2 million per child.
This debt undoubtedly implies an enormous drop in living standards.
Little wonder that CNBC-TV's Rick Santali coined the phrase “All Kids Left Behind.”
President Obama clearly has no intention whatsoever of negotiating any real restructuring of entitlement programs or of ObamaCare. It appears his hand must be forced.
Congress has little or no power to control the president — except to place a strict limit on Treasury debt.
The Republican-controlled House will have to block any debt increase without cast iron entitlement reforms. In recent “fiscal cliff” negotiations, the prospect of widespread tax increases forced some Republicans to capitulate.
Now, the serious prospect of closing down parts of the government comes into play. To reduce enormous waste, the federal government needs serious pruning.
Will Republicans or Democrats have the courage to think of future generations rather than the next election?
Our politicians will have a great deal to answer for if they continue to sentence America's youth to a life of poverty from extensive debt. The time is long overdue that Congress was forced to balance the books.
John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Total Trib Media. Email him at firstname.lastname@example.org.
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