Defaulting on our debt | Eastern North Carolina Now

    Publisher's Note: Jim Bispo's weekly column appears in the Beaufort Observer.

    The United States, according to the Administration, is risking a default if the debt ceiling is not raised by Aug. 2. Likewise, if we don't "get our act together," we are risking having our credit rating downgraded by Standard & Poors. We hear Moody's Investor's Service telling us the same thing. We even hear the Chinese Dagog Global Credit Rating Co. expressing concern over our finances. Of course the Chinese have a pretty good reason to be worrying about our finances; it's a whole lot of their money that will be lost if we go down the tubes.

    With regard to defaulting on our debt, there are a couple of things we need to understand. The first, and most important, is that the Administration decides what is paid first when there isn't enough money to go around. In this case "the Administration" would be the secretary of the treasury and the Prez. They decide; and listening to their rhetoric, it sounds as though they have already decided. Although the Prez didn't quite say it, he sure led us toward believing that he would not pay Social Security. That would be a double whammy for the seniors, because the money that they are supposed to receive is ostensibly their money, having been deposited into the Social Security Trust Fund over the years. Thanks to LBJ and his "Unified Budget," the money that was supposed to be in that trust fund has pretty much been replaced with government IOUs. (Way to go, LBJ!!) The point is that whether we go into default or not is a decision that will be made by the Prez or the secretary (or both) but not the congress. Even if they passed a bill directing the priority of payments to avoid a "default," it could not become law without the signature of the Prez. So why would he want to sign a bill to that effect when all it would do is take away his bargaining (threatening) power?? Short answer; he wouldn't.

    The other thing that is certainly deserving of some thought is how we really do handle business if the ceiling is not raised?? The Tea Party folks seem to have their hearts in the right place, but they need to stop and think it through before they out-of-hand vote to not increase the debt ceiling. Think about this. Some 40% (actually I believe it's a little higher, but 40% will work for purposes of this discussion) of what we spend comes from borrowed money. Now, suppose the debt limit is not increased.. We are told by the folks who are dead set against increasing the ceiling that we have enough money coming in each month to cover the interest on the debt, Social Security, the military, medicare, and some other "must do" activities. And those arguments seem to be valid - as far as they go. I truly believe that (implied threats aside) the Prez and his spear carrier Timmy Geithner, would pay the debt load, the military, Social Security and so on. The reason for this belief is that if they don't (and therefore allow us to go into default on our debts), the people will soon learn that the Administration's failure to take care of the debt service was the decision of the Prez, and he would be in big trouble with the American public - likely too much trouble to be able to pontificate his way out of (which he is normally very good at). He (I'm not so sure about "Timmy") should surely know that as soon as the word got out that it was he who decided which bills are paid first, and until the money runs out, his popularity would "tank" - surely not something he would like to see happen just a little over a year before the next election.

    But what about the 40% of our activities for which we will be unable to pay for lack of money if we aren't able to borrow?? Not many people who are advocating no increase in the debt ceiling would have much trouble identifying how we could reduce our expenditures by 40%. Start by getting rid of all the Czars and the Department of Education in its entirety. Follow that by getting rid of HEW and EPA in their entirety; and then about half of the Interior Department and TSA; about the same percentage of the State Department. Get the Dept of Agriculture out of the "subsidy" business (including a lot of the loan guarantees and grants they provide to non-farm activities in rural areas). Get rid of the Department of Transportation and let all the modal agencies go back to being "Agencies" or whatever they were before the Department was foisted on them. Give DoD a serious "scrub down"; bring home all our troops who are stationed in places like Japan (Okinawa), Germany, S. Korea and a lot of other places all over the globe unless the host country agrees to pick up at least half of the tab for keeping those troops stationed there. Get rid of almost all "Regulation Writers" no matter where employed. Extend the Social Security and Medicare eligibility age (after all the activities listed above). There's more... (As Julie Andrews might say, "These are a few of my favorite things.") There are more.

    If all of those cuts were achieved through "the stroke of a pen," we would have a recipe for administrative disaster in terms of reducing the staffing. I am not suggesting that we need endless studies to figure out how to go about taking care of the items outlined above and how to continue the work they are doing. There is nothing to figure out about the "work" they are doing. It all needs to stop. All we need is a schedule, and it should be a relatively short schedule. The schedule must fall entirely within the purview of a single administration (i.e., we cannot leave the "dirty work" for the next administration - which much of the Obama proposed and enacted legislation does). The point is, that no matter how quickly we would all like to see the size of government brought under control and reduced, it cannot be done overnight, although it is likely that a sudden stopping of the promulgation of regulations and cancellation of most that have been implemented during this administration would result in a virtually immediate improvement in the business climate, the employment outlook and government revenue. In the meantime, salaries need to be paid - which suggests that we really do need to increase the debt ceiling - at least to the degree that we cannot cover the salaries, etc. that must be paid while we go about reducing the size of our ever-more intrusive government. It is time to get realistic about what can and cannot be done and the time frame in which it can be accomplished. While in effect cutting off funding for all the activities identified earlier may sound like a good idea (and it is!!), we need to control our impulses to shrink the government in one fell swoop.

    All it would take would be the stroke of a pen. But then what?? That question is almost never asked (or answered) by our governmental decision makers - but needs to be. I'll tell you "what then?" Get the Obama Commissars (or is it Czars??) and the regulation writers, the permit issuers (blockers) and all other folks of that ilk (most of whom believe they know what is best for all the rest of us better than we do) out of the government and out of the way and just watch the economy "take off." The improvements will unquestionably greatly improve the nation's economy. Unemployment will decrease, businesses will flourish, the GDP will grow, and consequently - surprise of surprises - revenues will grow. The revenue will grow to a much greater extent than it ever would by trying to punish the successful people and companies in our country by increasing their taxes and handing it over to the non-producers among us; and it will be sustainable as long as the community organizer and his spear carriers stay out of the way.

    There is one more thing... We also need to do something that forces some rather high percentage of the increased revenue (if not all) to be used to pay down the debt.

    D'ya think??