Predictably, the most predictable crisis in human history continues to be ignored.
Bloomberg.com just posted an article on the debt, Blink! U.S. Debt Just Grew by $11 Trillion, which should have everyone manning the pumps, but likely won’t. The Titanic has steamed full speed ahead, straight on course, for the fiscal iceberg the lookouts have been reporting for the last forty years. For forty years our political elites have continued to pour on the coal, chopped up the lifeboats for additional fuel and refused to change course to avoid the now inevitable collision.
In the course of [the last] year, the U.S. government’s fiscal gap — the true measure of the nation’s indebtedness — rose by $11 trillion.
The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.
So just how big is that fiscal gap overall as opposed to just this year? $222,000,000,000,000. Two hundred and twenty two trillion dollars.
This fantastic and dangerous growth in the fiscal gap is not new. In 2003 and 2004, the economists Alan Auerbach and William Gale extended the CBO’s short-term forecast and measured fiscal gaps of $60 trillion and $86 trillion, respectively. In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.
Governments, like households, can’t indefinitely spend beyond their means. They have to satisfy what economists call their “intertemporal budget constraint.” The fiscal gap simply measures the extent to which this constraint is violated and tells us what is needed to balance the government’s intertemporal budget.
Things need to change, everybody knows this. Over at the Fiscal Times Edward Morrissey is not sanguine:
The biggest problems, though, are the candidates and the political parties themselves. The issues that voters want to discuss are broad, complicated, and far-reaching. So far, though, the response from both sides only nibbles at well-chewed edges of the core issues, with no one seemingly capable of framing a larger debate over the vision for America’s economy for the next several decades. One side talks about tax burdens, the other about fairness, and so far neither has given voters a comprehensive plan for solving this interlocking puzzle.
The politicos are rightly afraid that should any present the true state of affairs with realistic solutions to the voters it would be a guarantee of electoral defeat, to say nothing of ending the gravy train that enables them to buy votes with taxpayer dollars while enriching themselves and their friends. Things have to change, and they will. Not, I fear, because our political leadership will take the bull by the tail (in W.C. Fields’ immortal words), but because what can’t continue won’t.
This is a self inflicted wound, and we’ve been here before. As with issue of slavery, an untenable situation has been allowed to fester rather than cured, until the forces so unleashed mounted until a catastrophic clash has become inevitable. That is where we are today.
The cause of the malaise stems, in large part, from the creation of the welfare state under the auspices of the Democratic Party which has become the wholly-owned subsidiary of the hard Left and their Progressive/Socialist principles. That Party, and it’s driving principles, cannot remedy the situation it has created, only exacerbate it.
The principles of the Republican Party are sound (no, not “go along to get along”) as they conform closely to traditional mainstream American values. Among those is fiscal responsibility. One can point out that Republicans have feasted at the taxpayers expense as well, and it is necessary and right to do so, as not a few have. However more of those are facing and have faced primary challengers of more disciplined bent. Republicans have, as a Party, always been more inclined to protect the nations finances, and what we are seeing in recent primary results is that they are going to be more inclined to do so. It will be up to an informed, aware and determined electorate to not only put these people in office, but to scrutinize their actions while in office and demand of them intelligent, effective action to insure that the nation survives the impending catastrophe but does so with due regard for the Constitution and the People to whom they are responsible.
For a further discussion of indebtedness, see Daniel Greenfield’s excellent post over at the Sultan Knish blog.