Parables of the Hysterical Debacle of Historic Debt Deal
Parables of the Hysterical Debacle of the Historic Debt Deal
Something happened today. It was historic. It was historic because everything that happens today is historic. It then becomes the task of people many years hence to figure out what the history meant, if anything. Or which parts of history are important. Or even which parts of history are preserved so that a story might be told. So cringe and wince, gnash and bristle – for when some news person or politician or pontificator says “This is a historic deal” you can be sure that it is just as historic, no more nor less, than any other deal to not spend money you don’t have on things you can’t afford and on which you haven’t even spent a dime on yet, but only wish to spend over the next 10 years, and claim that it is a “cut in spending.” For it is flimflam.
But one part of history that is real, and repeats itself, is this: when a nation, any nation, continues to borrow ½ its annual spending, then that nation will eventually go into convulsions. For eventually no one will lend, and then cuts will be made in spending, not in wished for spending. Unto what can I liken this “historic deal”? To not spend money one wished to spend, but continue to spend every other dime you can conceivably beg, borrow or steal – i.e. tax, borrow and inflation – and have the audacity to call it a “cut.”
There was a drunk, who lived happily enough, with cherry trees in his garden of monuments. He was a rich drunk. And he used to drink a pint a day, and when he went to a quart, he left a little bit in the bottle and said, “See, verily, I have cut back my drinking!” And the staff of his house did marvel at his fortitude in moving towards sobriety. Then he pushed his drinking up to a ½ gallon. But because he could only consume a quart and a half a day, he was praised for his abstemiousness in his drinking habits. And soon enough, he upped his spending on it again, and lo, now he was a ½ gallon and a pint a day, but he had planned to buy a ½ gallon and a quart – and he did not – he bought but the pint – and his staff marveled at how he did cut his spending on liquor. And he looked out at his cherry garden and was happy.
There was a neighboring man, he earned $240,000 a year, so was very rich, and he was spending $400,000 a year, for he felt he need to stimulate his life, and he was rich, and his credit good, and he borrowed the extra $160,000. And that year life was good. So he did it again next year. And because it was so good he got out pen and paper and planned to continue this spending and stimulus to his life, for it was good and his children happy and his wife with a new boat named after her. But the bankers did complain after awhile, that perhaps because he was earning no more money each year, that perhaps he should consider stopping the spending. His children sort of grasped this too, so told him so. And he said, well, OK then, I shall plan on spending only $390,000 a year over the next ten years rather than $400,000 a year. And this was seen as good by some, and as a little nuts by everyone else. But the man persisted, and threw himself a big birthday party in his cherry tree garden.
Still further down the road there was a man equally overspending, borrowing every dime he could get his hands on. He planned on buying a brand new sports car, to go very fast, on roads that didn’t permit that type of speed anyway. And so in his new economy of spending, he decided to not buy the car, but continue his overspending anyway. And he went to this bankers and said, “See, I have cut back my spending. Lend me more money.” And the bankers were not happy to do so, but the man had a friend who was a Congressman, and that Congressman called up the banker and said, “Oh, surely you can do this – it is good for everyone. Why, the economy will be helped, for this man spends his money, so people are employed.”
“But he cannot pay it back,” said the bankers.
“Yes he will,” said the Congressman, “I guarantee it.”
“How do you know? How can he?”
The Congressman puffed out his chest and bellowed: “I have full faith in his credit and he’s a good man, and his spending helps people, so they will spend more too, and he will earn more from their spending, and you will too, and if he can’t I’ll pay it back for him.” And the banker could only lend more money, for otherwise trouble might be caused by the Congressman.
There was a group of people who needed to be helped. For they were making $100,000 a year. But they were taxed to the tune of $50,000 a year. So they had to cut their spending, for they did not want debt, and the bankers had no faith in their credit. And so they cut spending. And all the people who had been employed in their neighborhood and city from the $50,000 were no longer employed. And the $50,000 which went to the cherry tree gardens with lots of monuments was spent on big buildings, and PowerPoint Presentations, and shiny vehicles for the staff to drive around in, and meeting rooms, and paper so that everything might be kept track of, and computers and special software for the job of keeping track of all that money is very special. The men with the paper and shiny vehicles and big offices decided that there was good to be done, so they decreed such and such new rules and regulations, to make the world better.
And the man with the $100,000 job for which he only took home in pocket $50,000 was laid off from his job because the retrofitting of the plant where he worked, and the new health care reporting requirements, and the new forms that had to be filled out to make sure the men in the cheery tree gardens were happy that tax dollars were being spent wisely and goodly for the nation and this particular taxpayer too, simply made it impossible for the employer of the $100,000-$50,000 a year man to pay him. And thus the man who kept only half of what he earned so as to pay the men in the cherry trees to create the rules which took the ½ of his wages in the first place, was now without any income.
And the men in the cherry tree gardens said, “Fear not your fear, and we shall borrow money to pay you to stay home and not worry of these things, and we shall borrow money from the banks to repay your loans to the banks you cannot pay.”
“But from whom will you borrow the money?”
“Don’t worry about that, we have discussed it in our secret garden, and all will alright. Here have a drink.”
“I don’t drink.”
“But you are thirsty.”
“Do you have tea?”
“No, only booze, so we might all drink a quart a day.”
“But I can’t drink a quart of booze a day.”
“Ah, good, so you cut your consumption.”
And the man who would not drink the booze went out to his woodshed and got an ax and cut down a cherry tree for firewood, for he still had to cook and heat his house. About which he could not lie around and do nothing. Nor lie about chopping down the cherry tree.
And this story is just as real and “historic” as the tale being told in Washington today, which will be disseminated all across the land on all the news channels – I have heard and seen “historic” now several times, and it’s barely 10AM. So, the federal government, which takes in $2.4 trillion a year in taxes, and it spends now $4 Trillion a year – and it is planned that we as a nation will spend $4 trillion a year for the next 10 years. Borrowing $1.6 trillion a year every year, along the way to the future – or $16,000,000,000,000 in 10 years. And now, due to the historic deal among the drunks under the cherry trees we will only borrow $14,000,000,000,000 in 10 years – and for this they tell us they have saved the nation. From what?
And in answer I say, pfffttt, where’s my tea?
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