Dear Reader,
With the pleasure of repeating myself: On Dec. 11, I wrote:
- Will the federal government “shut down” on Dec. 20?
- The answer — of course — is no.
- What politician will risk blame for a government shutdown… five days prior to Christmas?
- He will be denounced as the fiendish combination of Grinch and Scrooge.
- Believe it: Congress will hand down another continuing resolution, so-called.
- That is, Congress will boot the budgetary soda can further down the roadway.
- I will devour each and every word I write today if mistaken — without salt.
I Was Right
The federal government did not close on Dec. 20. Both parties agreed upon a 10th-hour resolution.
House yaysayers outvoted House naysayers 336-34.
Senate yaysayers outvoted Senate naysayers 85-11.
On Saturday the president applied his authorizing signature… and the American Relief Act, so-called, entered effect.
The thing will keep Uncle Samuel up and going through Mar. 14.
I am pleased I escaped the bitter, unsalted meal. And yet:
I would have gleefully worried down the culinary abomination if government had shuttered.
That is because it would have represented some slight flicker of fiscal judiciousness — however dim.
One Cheer
I nonetheless extend the compromise bill one cheer. Not three cheers, not two cheers.
One cheer because the original 1,547-page equaled a first-degree fiscal felony.
That felony endured a severe subsequent downgrading… to a 118-page misdemeanor.
Even Mr. Musk — who thundered against the original felony — withdrew his objections:
- The Speaker did a good job here, given the circumstances. It went from a bill that weighed pounds to a bill that weighed ounces.
Yet I reflect deeper. And I withdraw even my resigned and reluctant single cheer.
I stand instead in muted silence — zero cheers.
More Debt, More Deficits
Why zero cheers? Because the American Relief Act blesses additional debt.
It spends more money not in actual possession of the United States Treasury.
It represents the same. And more of it.
Thus I am with Republican Representative Chip Roy of Texas:
- To take this bill… and congratulate yourself because it’s shorter in pages, but increases the debt by $5 trillion, is asinine.
Thus I am with Republican Senator Robert Johnson of Wisconsin:
- I don’t care about the pages removed from the original bill. They didn’t pay for it, so I’m not voting for it.
Alas, gentlemen, you were shouted down — and blaringly.
Get Ready for the Next Big “Crisis”
The next great government “crisis” will center upon the nation’s debt roof.
Uncle Samuel will ram his whelky head against the debt roof shortly into Mr. Trump’s term — perhaps even in January.
The debt roof rises presently to $31.4 trillion.
Unless Congress votes to haul the jacks out of storage… and elevate the debt roof once again… the United States government can issue no fresh debt.
The statute books disallow it.
Yet the United States government must issue fresh debt to keep itself in funds.
Taxation alone is inadequate to needs.
The United States government would then confront default as its cupboards run bare.
Calamity Upon Calamity
Come the evil day when the cupboards are at last depleted…
Every manner of calamity would ensue. Chaos and Old Night? You would have them in heaps.
The federal government would slam its door on the noses of the American people. They would be forced upon very lean rations and thrown into severe desperation.
Meantime, the federal government’s creditors would go scratching as it defaults on debt.
Economic woe would spread and spread in ever-expanding circles.
You will hear endless laments about it as the evil day nears.
“We must elevate the debt roof — OR ELSE!!!”
And of course they will elevate the debt roof.
The Congress of the United States has elevated the debt roof on 78 occasions since 1960.
Early next year the Congress of the United States will elevate the debt roof for the 79th occasion since 1960 — depend on it.
Absolute Fraud
Will threats come issuing to hold the debt roof in place?
They will, yes. Yet they will prove false threats.
They will be not threats but negotiation devices.
Thus economic commentator Rick Rule labels the debt roof debate “Fraud, absolute fraud.”
More from whom:
- We’ve never actually observed a debt ceiling… I happen to think it’s necessary, but I’ve observed for my entire adult life them finding procedural ways around the debt ceiling. So there isn’t one, despite the fact that it’s law.
So what’s another one? Why should you sob about it?
- Most of the debt isn’t on the balance sheet. The debt ceiling involves $36 trillion owed to bondholders. But the Congressional Budget Office says that the net present value of unfunded government liabilities, that’s entitlements, exceeds $100 trillion. That $100 trillion isn’t even discussed in the debt ceiling debate…
Just so. Yet again: Why should you sob about it?
- The bill is coming due. The bill is truly coming due. And millions of Americans will be blindsided…
- We’ll ultimately solve the problem, if that’s the right phrase, by devaluing the US dollar enough so that the present net value of the obligation is removed.
- That is to say, some old codger who’s been promised $4,000 a month by Social Security will continue to get it, but the $4,000 will buy what $600 or $700 used to buy.
Who’s the Real Villain?
All this because Congress cannot rein itself in.
All this because Congress cannot limit its spending to the proceeds of honest taxation.
We are simply told the show must continue.
We must elevate the debt roof early next year. And the year after that, the year that follows, and the year that chases that one — world without end.
If you attempt to impose a halt on the business?
You are labeled a reckless and irresponsible devil. You invite default.
You willing to risk the full faith and credit of the United States — such as it is.
That is, the grand villain of this tale is not the spender who barrels through debt ceilings and plunges the nation deeper into debt.
It is instead the prudent and fiscally responsible fellow.
It is the concerned caretaker of the Treasury. It is the honest and earnest man after a sound and sustainable accounting.
Thus the hopelessly indebted declare virtue vice… and vice virtue.
It is wisdom rotated upon its head. It is anti-wisdom.
Yet it is the “wisdom” of the American political system.
Regards,
Brian Maher
for Freedom Financial News
