We're back at a juncture we've found ourselves at several times. It works a little differently from the way such a juncture does in a household. (And here, we're assuming a responsible couple heading that household, a couple with a common goal of ensuring financial soundness in the present and for the future.) In a household, the people involved come to an agreement along the lines of, "Okay, given our present income, present savings plan, and reasonable confidence that both can be maintained, if we ever have to go in yet, here's how much we can handle, but we must never that."
Government has options for skirting the firmness of such an agreement. It can tax citizens more, issue bonds and print money. Congress never worries about whether those measures will actually be taken when spending bumps up against the agreed-upon limit. Treasury bond holders still seem to have enough confidence in the full-faith-and-credit premise of the arrangement to keep things shored up, at least on a band-aid basis.
How did all this get started, anyway?
It’s a legal limit dating back to 1917 that caps the level of debt that the federal government can assume. Once the U.S. hits the limit and exhausts ways to pay its bills, Congress must lift the ceiling in order for the government to continue to borrow to meet its obligations. If it doesn’t, the country could be forced to default, which experts warn would be economically catastrophic.
Republicans have waged heated battles over the debt ceiling, most notably in 2011, but they have always been resolved in time.
Now, it's true that the rush to resolve a debt-ceiling crisis is not about new spending. Government is on the hook for the debt in question. But the fact that government keeps coming to a moment like this means that no one ever thinks of operating government at a debt level far enough below the ceiling to avoid trouble.
In light of that, is it grandstanding for McCarthy to insist on spending cuts in his negotiations with Biden? That case could be made; McCarthy has something of a track record as a grandstander. But his stance is predicated on a question worth asking: At what point do we have the difficult discussions about the reason we're always up to our eyeballs in debt?
And what might that reason be? Well, that's why the discussions would be difficult:
Politicians promised you benefits, but never funded them.
That’s according to truthinaccounting.org, which noted that there’s $96.3 trillion owed in promised but unfunded Medicare and Social Security benefits — $55.1 trillion for Medicare and $41.2 trillion for Social Security.
While Uncle Sam has $5.9 trillion in assets, the $129 trillion owed in bills — including military and civilian retirement benefits — means the U.S. is in the hole for $123 trillion. Just the unfunded liabilities in Medicare and Social Security add up to $96 trillion.
It is a stunning amount coming due over the next 75 years. The Treasury Department sticks its proverbial head in the sand and does not even list the liabilities on the balance sheet of the federal government.
But not to worry, taxpayers will not actually be paying for this. How could they?
Instead, older people who have been promised these benefits likely will not be paid in full.
If by some magic we do manage to pay for these promised benefits, it is young people who would be saddled with trillions in extra taxes with nothing in return.
Unelected policy makers in the twentieth century decided for the nation that government should address two major givens of human life - old age and sickness - that had, to that point, been outside its purview. Frances Perkins, the fourth labor secretary of labor, was the architect of social security in the 1930s (as she was of the minimum wage and unemployment insurance, two more unprecedented intrusions into the life of the citizenry). Medicare was the brainchild of a Democratic congressional majority in the 1960s who found it unacceptable that only 60 percent of older Americans had health insurance.
These programs and the thinking behind them didn't appear spontaneously. They have their roots in the progressive movement of the early twentieth century. Thinkers such as John Dewey, Thorstein Veblen, Richard T. Ely, Herbert Croly and Woodrow Wilson looked at the rapid industrialization and urbanization of the country and concluded that the Madisonian framework for American government was no longer sufficient to address the issues of the day. Furthermore, legislators elected from the populace around the country lacked the knowledge to deal with those issues by crafting bills to target each one. In their view, what government needed to do was hire a cadre of experts in areas such as transportation, infrastructure, labor, health care, education and agriculture that would flesh out with details broad mandates enacted by Congress.
This fundamentally changed the average citizen's view of his or her relationship to government. Government, with its monopoly on the legitimate use of force, was now assuming a seemingly benevolent role as well, and private citizens would be henceforth dependent on it for basic necessities. No longer was the state just tasked with keeping bad guys foreign and domestic from knocking us over the head. Now it would assume responsibility for the planning of an individual's life course.
Over the course of the last 90 years, people have come comfortable with the trading off of having choices as to how to plan for their basic well-being - liberty, if you will - for being unburdened with having to think about such daunting matters.
There are think tanks and lobbying organizations dedicated to the quixotic task of rolling this all back, but without an understanding on the part of the country's inhabitants of the preciousness of their freedom to steer their own destinies. That, in turn, requires an understanding that individual sovereignty is the image and likeness of the Creator's sovereignty.
But it's pretty late in the day for a conversation like that, isn't it?
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