With the national debt currently at $16 trillion and growing, the U.S. is liable to owe over $22 trillion by the end of the next presidential term. Two years ago, the tea party folks were riled up about this. They repeatedly asked their representatives what was going to happen when this bill came due.
Back then the passion was palpable. You could hear it in the angry voices of ordinary citizens who wanted their questions answered. You could see it in the eyes of politicians who feared that their careers might be ended — as some were.
Where has this fervor gone? Are people burned out? Or are they just inured to a problem they have heard too much about? Whatever the reason, this is a challenge we must meet. Even Barack Obama admits it has to be solved — albeit, “in the long run.”
So how are we trying to solve it? The president claims he has a plan. It is not a new plan, but one he has touted for some time. According to him, he can lower the budget deficit by $4 trillion over the course of the next decade. This will presumably “slow” the growth of the debt.
But where are these “savings” coming from? In his new book, “The Price of Politics,” Bob Woodward gives us a good idea. His chronicle of the negotiations between Democrats and Republicans over raising the debt limit is revealing. Once more it demonstrates that Obama is not a man of his word.
At the time, Barack was also bragging about $4 trillion in savings. Yet where did he get them? Fully $1 trillion was to come from not spending money on the Afghan war that no one had planned to spend. In other words, this was fictional money.
According to Woodward, when liberal Democratic Congressman Chris van Hollen heard of this, he called it “funny money.” Even Treasury Secretary Tim Geithner conceded it wasn’t real, but went on to say “We need to have this because the rating agencies and markets believe this stuff.”
To be blunt, this budgetary reduction was a lie. Nonetheless, van Hollen, Geithner and Obama agreed to it because they thought they could get away with it. The president likewise took credit for a trillion in cuts Congress had already signed off on. In other words, more phantom cuts.
The theoretical $4 trillion was rounded out by a trillion in new taxes — to which Republicans are adamantly opposed — and a trillion in lower interest payments. Put this all together and the president’s plan to slash the debt added up to a room full of hot air. What a surprise!
Now append the additional spending Barack proposes. Once more he seeks to “invest” in teachers, shovel-ready road projects and windmills. He doesn’t quote a price, but you know this won’t come cheap when there are so many campaign-contributing cronies to appease.
This may sound amusing, but it is not. Those who can count know it won’t be long before the interest payments on our debt are larger than the gross domestic product. When that happens, the only way out will be a roaring inflation. Dollars will then become so worthless that our loans can be paid off in play money.
If that doesn’t sound scary, I remember my uncle bringing home German postage stamps after World War II. They were denominated in the trillions of Marks. Indeed, the inflation under the Weimar Republic got so bad ordinary Germans welcomed Adolf Hitler as a superior alternative.
What will happen to us once it takes a wheelbarrow full of cash to buy a loaf of bread? Will be shrugging our shoulders and chuckling about the political skills of a president who could get re-elected even after ruining our credit rating?
Melvyn L. Fein, Ph.D. is a professor of Sociology at Kennesaw State University.