Sunday, July 31, 2011

Default is a lie!

The soundbytes have been flying across the airwaves like missiles over Baghdad in 1991.

A succinct sampling of the news over the past several weeks would read something like this:

“We have bipartisan support.”

“We’re working on a deal to get this done.”

“No deal!”

“You’re not willing to compromise.”

“We have been in talks with the President to reach a deal.”

“No deal!”

“Why would you hold America hostage?!”

“You said the same things five years ago!”

“No deal!”

But, there is one soundbyte, one phrase, that inexplicably is being uttered and rehashed by the left, the right, and even some libertarians.

“We will default if the debt ceiling isn’t raised.”

Out of all components of the latest political circus on display inside the Beltway, that last non-stop, three-ring performance over the debt ceiling has been equally as nauseating as the doomsday rhetoric flowing out of the White House.

Ballyhooed by the party’s ringleader in chief, House Speaker John Boehner, congressional Republicans (and even a number of their talking heads) have also been prattling-on as though they believe the “default” hype.

But, there is one cold, hard truth being deliberately ignored.

Default is a lie.

As so many others have pointed-out already, given the fact the federal government is projected to bring-in $2.2 trillion for Fiscal Year 2011, payments on existing debt will run about $200 billion, Social Security is expected to exceed $700 billion, and the combination of Medicare and Medicaid will run almost $800 billion there will be enough in tax receipts to cover the $1.7 trillion in entitlements.

That leaves roughly half-a-trillion dollars to do the remaining federal business.

What does this mean?

The second-most-obvious answer is someone in the White House is going to (finally) have to understand how to prioritize spending.

Every other entity and operation in America has to learn to live within their means in similar situations… Although, they must do so since they don’t enjoy access to their own monetary printing presses while the federal government is immune from its own counterfeiting laws…

…But, as usual, I digress…

And then there is that pesky most-obvious answer I almost distracted myself from addressing.

The federal government has the money it needs to make all its mandatory expenditures. All the rhetoric, all the hype, and all the hysteria are predicated on lies.

Is default possible? Certainly.

But here is the ultimate truth in the discussion of such an event: should a debt ceiling agreement not be reached, the only way American debt payments, social security checks, and other domestic benefits won’t get paid-out would have to be as a result of a deliberate choice by the President.

So, no matter what chatter gets shot across the airwaves or splashed onto the front pages of all the periodicals about either the Tea Party “hijacking the process” or whatever other narrative gets manufactured, any withholding of payments which the government is legally (not to mention constitutionally) obligated to pay still boils down to a conscious decision within the White House.

And if the President makes that choice, all the “Impeach Obama” rallying cries which have rang predictably hollow so far just might unexpectedly get some teeth to them.

Related side notes

The single most nauseating talking point raised by Republicans so far has been the notion that forcing this administration to begin choosing where to drop the axe on federal spending means leaving all the discretion up to the Democrat-held White House.

The leading minstrel on this argument has been – surprise, surprise – Senate Minority Leader Mitch McConnell of Kentucky.

This is the same Mitch McConnell who practically broke into tears over mentions of reducing discretionary spending a year ago.

The Bluegrass State’s senior Senator continues to let his priorities shine like a beacon of patheticness.

Once again the tenuousness of Social Security has worked its way to the forefront political discussions. Every Libertarian across America ought to be beating this drum relentlessly in light of the opportunity presented.

For the first time last year, the Social Security Administration found itself having to dip into the so-called lockboxes and…

…Figure out what to do with stacks of worthless IOU’s.

And that has come to pass because of decades of borrowing against the Social Security Fund that was supposed to be funded by all the FICA taxes collected since the Roosevelt era.

Things were running smoothly until we finally reached that point – which had been predicted for years – when the amount owed in Social Security obligations exceed the amount of FICA taxes being collected to ensure the checks continue to go out in the mail.

There should be trillions of dollars in reserve to permit the seamless continuance of payments in transition from entitlement surplus to entitlement deficit without any hiccups. However, both parties kept dipping their digits into that cookie jar for years: now all we’re left with is the most extravagant Ponzi scheme ever fathomed – with 30-something sessions of Congress making Bernie Madoff look like a pocket change pilferer.

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