U.S. Debt Calamity In The Making ?
By Stanley C. Clayton, Ph.D.
January 23, 2010
This is a Special Edition of Tea Leaves. The format is different, and the content is especially timely.
Worth a look
Recently there was a very telling juxtaposition of events. On January 13, 2010, the Committee on the Fiscal Future of the United States (24 renowned experts) published their report saying, in essence, that the finances of the United States is nearing catastrophic debt conditions, and though the hour is late, prompt, dramatic and painful economic restructuring could yet save the day. The solution, simply put, is that we must vastly reduce spending plus increase revenue - not tomorrow sometime, but today. They are not the first to come to this conclusion, and likely will not be the last. Just 2 days later, as reported by Bloomberg news on January 15th, a member of Congress reported that an effort within Congress to set up a mechanism to limit the U.S. debt is doomed to failure before it can even get started. Interesting!
Surprised? Of course not. You have seen this sort of thing time and again where a learned commission recommends and Congress ignores. So? Why even bring it up? It just may be important.
This reminds me of a boating situation I recently witnessed. I live along a gentle bend of a popular river that is used by boats of all shapes and sizes. That day I noticed about a 50 footer at full cruising speed taking a straight line on the gentle bend. Not a good idea. I called out to my wife, "Look, he's not turning". As we rushed to the window I thought, "This is going to be ugly". It was too late for him to turn, but the captain suddenly slammed it into full reverse missing disaster I am sure by no more than inches. In about the time it takes to change one's drawers and clean up a little, the vessel began slowly cruising on down river. I suspect the captain learned an important lesson that day: someone has to steer the ship - not just some of the time but all of the time. Even auto-pilot requires constant human vigilance, especially on a river.
Our "ship of state", as we are often reminded, constantly sails in challenging waters frequented by storms of all descriptions and with obstacles of all kinds. As a member of the crew (citizen), you notice the officers (elected government officials) are fully distracted locked in endless debate as if the ship can successfully sail on auto-pilot alone. What do you do? Is "I don't wanna think about it" going to work for you? Is it time to dance?
You have seen argued in Tea Leaves that our Nation is indeed in serious economic trouble. It has perhaps been hard to believe, granted, but this committee report seals the case. Below is the citation information, with two direct quotes, followed by a link where you can see their full report.
Committee on the Fiscal Future of the United States, Division of Behavioral and Social Sciences and Education, NATIONAL RESEARCH COUNCIL and NATIONAL ACADEMY OF PUBLIC ADMINISTRATION
What we firmly agree on is the need for strong action now to adjust the long-term relationship between federal government spending and revenues—the urgent need to put the budget on a sustainable path. We also agree that this is going to be one of the biggest political challenges the nation has ever faced. (p. 209)
In sum, tackling the fiscal crisis is perhaps the toughest kind of political problem. Given its characteristics, quick, decisive action to put the nation’s budget on a sustainable course may be improbable. Yet if action is not taken in the near future, the nation will face a calamity, and the possible actions will be fewer and far more disruptive than what is now possible. Thus, now is the time to debate alternatives, to choose, and to act. If this is done, the nation’s fiscal course can be corrected in ways that avoid the worst pain. (pp. 210-211)
