America is on track to go bankrupt. Just like Greece. The signs are all around us. We’ve lost our AAA credit rating. Trillion dollar deficits are the new normal. The Fed is buying 61% of our own debt. Barack Obama’s 10 year budget will leave Americans with “more debt than has been accumulated by all previous Presidents in American history combined.”Nobody on the Left or Right seems to believe we’ll ever pay off all of the money we owe. Life as we know it is very close to ending and yet Americans seem to be infected with a tragic stoicism. Like turkeys being led to the slaughter, most Americans seem content to put their necks down on the butcher’s block and wait for the ax to fall. There are reasons for this puzzling inactivity in the face of an avertable catastrophe.
1) They’re being misled by people with bad motives:What do you think would happen to Paul Krugman if he were to tell everyone that he is still a liberal, but the Tea Party and Paul Ryan are right about the deficit and Barack Obama and the Democratic Party are wrong? His column at the New York Times would be gone within six months. Do you think Nancy Pelosi and Harry Reid would continue leading their caucuses after 2012 if they insist on serious deficit reduction? Not a chance. What about a Democrat running in a liberal district who talks like Jim DeMint on deficits in a primary up against another Democrat who wants more spending? Who do you think would win? The big spender, right? Unfortunately, there are a lot of people in this country whose personal welfare depends on encouraging as much government spending as possible and even if the country goes bust in the process, they’re hoping to have enough money in the bank to be able to move somewhere else by then anyway.
2) They think it’s far off in the future: Most people think bankruptcy is a problem we’ll be leaving to our kids after most of the people reading this column are dead and gone. That’s not so at all. If you were a betting man, 5-15 years would be the likely timeframe on a default with it practically guaranteed to happen within 25 years without major changes — although that may be far too optimistic. America is already stretched to the breaking point and who knows what sort of unexpected event could push us over the edge in the next few years? Maybe the crack-up of the EU, a European bank collapse, an organized effort to keep other nations from buying our debt, another, even more devastating 9/11 style attack, a dramatic surge in oil prices caused by an Israeli/Iranian war, etc., etc. Just as the mortgage crisis caught us flat footed and caused much more damage than we expected, a new crisis that occurs while America’s economy is still puttering along as it has been during the Obama years could lead to a much deeper economic spiral than we anticipate.
3) Crisis fatigue is rampant: This is the most important election ever! Tune in at 6:00 P.M. to find out which ordinary product you use will kill you! George Bush is Hitler! Republicans want you to die! Racism today is as bad as the sixties! If you oppose gay marriage, you want to drag homosexuals to death behind your truck! If you disagree with Obama, you’re a racist! Your freedom is at stake! Global warming is going to kill us all! Modern Americans are deluged with phony crises and ginned-up outrages all day long. That’s why it’s not a surprise when a real crisis as serious as anything we’ve ever faced in our nation’s history comes along, many people have trouble distinguishing it from the fake dangers they hear about on a daily basis.
4) It’s too confusing to comprehend: Most Americans don’t even remotely understand the scope of the problem. They think we can raise taxes on the rich, cut a few bucks off foreign aid, and everything will take care of itself. When you start talking about unfunded liabilities, GDP, and trillions in debt to people who don’t know much about economics and don’t follow politics very closely — which probably describes more than half of the American electorate — you might as well be explaining the ins-and-outs of heart surgery. In other words, they may get it in the most general sense, but they don’t really understand it, and they probably aren’t going to opt for it unless they become convinced they’re going to die otherwise.
5) It’s painful to stop and easy to continue: It doesn’t matter how reasonable the spending reductions you’re suggesting are, if you want to cut ANYTHING in D.C., it will set off squawks of protest from the vultures who are having meat snatched out of their greedy mouths. However, if you really want to make people angry, start hacking money out of the three biggest expenditures in the budget: defense spending, Social Security, and Medicare/Medicaid/CHIP. We MIGHT be able to get by without cutting defense significantly since it’s a relatively stable expenditure, but unless significant changes are made to both Social Security and Medicare/Medicaid/CHIP, both of which are rapidly increasing in cost, this country is going bankrupt. That’s reality. Of course, it’s also reality that making changes to both of those programs is unpopular, easy to demagogue, and scares most politicians more than a special prosecutor talking to their favorite hooker.
6) We still seem to be a rich country: America is a like a guy who lives in a five million dollar mansion with a dozen servants, drives a Ferrari, and hands out hundred dollar tips to waitresses and bellhops. The only problem is the mansion and the Ferrari aren’t paid for, he’s borrowing the money for the servants and the tips, and he has no hope of ever paying off the debt he’s accruing while he lives a lifestyle he can’t afford. Superficially, he looks to be very rich, but when the bill comes due, life is going to change for him in a hurry.
America is that guy and the bill is going to come due.
7) They don’t see how it will affect them: Most Americans don’t have the slightest clue how a default would change their lives for the worse. They don’t understand that it would lead to another Depression, their life savings could become worthless almost overnight, their taxes would skyrocket, their standard of living would drastically decrease, Medicare and Social Security checks could stop, and we could have widespread disorder. In Greece, some government workers haven’t been paid in months, government road projects are being abandoned, healthy businesses can’t get credit, and medicine is in short supply. Unless something changes, Americans won’t have to imagine what that will be like because we’ll be living it soon enough.