When it comes to spending and the size of government, only the Democrats are officially panting orgasmically, "More, More, More; How do you like it?" while the Republicans are formally committed to "Less less less." This makes for many dramatic showdowns on the evening news. In the summer, it was the "looming" "deadline" to raise the debt ceiling. In the fall, it was the "looming" "deadline" for the alleged supercommittee to agree $1.2 trillion of cuts. The supercommittee was set up as a last-minute deal for raising the debt ceiling. Now that the supercommittee's flopped out, "automatic" mandatory cuts to defense and discretionary spending are supposed to kick in – by 2013. But no doubt as that looming deadline looms the can of worms will be effortlessly kicked down the room another looming deadline or two.There's an old saying: Don't put of tomorrow what you can do today. Unfortunately, when it comes to impending economic meltdowns, our politicians don't seem to be the "can do" types.
A second downgrade is now inevitable. Aw, so what? We had the first back in the summer, and the ceiling didn't fall in, did it? And everyone knows those ratings agencies are a racket, right? And say what you like about our rotten finances, but Greece's are worse. And Italy's. And, er, Zimbabwe's. Probably.
The advantage the United States enjoys is that, unlike Greece, it can print the currency in which its debt is denominated. But, even so, it still needs someone to buy it. The failure of Germany's bond auction on Wednesday suggests that the world is running out of buyers for western sovereign debt at historically low interest rates. And, were interest rates to return to their 1990-2010 average (5.7 percent), debt service alone would consume about 40 percent of federal revenues by mid-decade. That's not paying down the debt, but just staying current on the interest payments.
And yet, when it comes to spending and stimulus and entitlements and agencies and regulations and bureaucrats, "more, more, more/how do you like it?" remains the way to bet. Will a Republican president make a difference to this grim trajectory? I would doubt it. Unless the public conversation shifts significantly, neither President Romney nor President Insert-Name-Of-This-Week's-UnRomney-Here will have a mandate for the measures necessary to save the republic.
Sunday, November 27, 2011
While we're not as bad off as the EU, Mark Steyn isn't optimistic over our long-term chances of avoiding the same mess: