Politics is theater. The more emotionally involved people become in the story the closer they pay attention and the more they care. If anything the shutdown and debt ceiling fight gained a lot of press and campaign donations for a score of politicians. Bill Clinton recently mentioned that politically speaking conflict is a good thing, maybe not for the nation, but for rallying people to the polls.
Good theater involves plot twists and deceptions. The American people have been lied to so often we don’t know who or what to believe anymore.
With the debt ceiling crisis, there was the issue that it could cripple the economy. One reason the economy would have been hurt is that if we don’t pay our debts, the cost of borrowing money in the future goes up. Sen. Rand Paul insists that shouldn’t be a problem since we could pay the interest on our debt with what tax receivables we have coming in. That completely ignores how many people would be unemployed, and how gutted defense would be if we did stop borrowing money to keep the government going, at least in the short term.
For fiscal year 2013 the U.S. government is expected to bring in $2.902 trillion while spending $3.803 trillion. That’s a deficit of $900 billion. That can’t continue. Some are so worried about it they think hitting the debt ceiling would be good since we couldn’t borrow any more money.
If were to hit the debt ceiling, we could still pay for mandatory federal spending. That is spending that is written into law and doesn’t have to be revised every budget, though it can be revised. Mandatory spending includes things like Social Security payments which people have technically already paid for, though most departments have some amount of their budget considered mandatory.
Paying for mandatory spending plus interest on the national debt would cost $2.539 trillion and would give us $363 billion for discretionary spending.
Discretionary spending is approved with every budget and includes items like most of the Department of Defense budget, Title 1 money for schools, national parks, most Pell Grant monies and Head Start.
Let’s say we spent that $363 billion on the Department of Defense and nothing else. Since most of its money is from discretionary spending, it would still face a cut of 49 percent. The Veterans Administration would lose 43 percent of its budget. The Department of Homeland Security would lose 99 percent of its budget. National parks would close. There would be no Department of Commerce, NASA, Department of Energy or Small Business Administration.
I don’t see how this could be good.
I do know a group that could benefit. The stock market went up and down with news of the government negotiations. Obviously some people would have inside knowledge of the negotiations. Investors make money by predicting which way stocks go. Money can even be made betting against stocks. Investors with friends with inside knowledge could make a killing on the easy-to-orchestrate ups and downs of the market.
Also, if the nation were to reach the debt ceiling, our credit rating may be downgraded, even if we did pay the interest. That means those who lend us money will make more interest off those loans. Those with the means to invest large sums of money and the means to come through an economic downturn could actually benefit from the U.S. having its credit rating reduced.
Just 1 percent of our nation owns 50 percent of its stocks, bonds and mutual funds; that’s a lot of power for a small group. With that in mind, it’s time we really look closely at which politicians floated the idea that collapsing government immediately was all right and who exactly is donating to them.
If we elect people to office based on the premise that they believe government is inherently dysfunctional, can we be surprised when they prove it? If our so-called conservatives were serious about balancing our budget and paying off the debt, we’d start with a special purpose tax to pay for the Iraq and Afghan wars, which were fought on credit.
Let’s get beyond theater and balance this budget.
Brandon Givens is a Hall County resident and frequent columnist.