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Steve Lunetta: The spending orgy

Posted: February 17, 2014 2:00 a.m.
Updated: February 17, 2014 2:00 a.m.
 

I admit it. I am blissfully unaware of most things related to government budgeting. Because, frankly, it bores me.

I’d rather watch paint drying. Or read another Democratic Voices column.

Unfortunately, I think I’m like most Americans. We just find the whole process a crushing waste of time. And the wonks that run government know this and are able to poorly manage things because of our indifference.

Shame on me and shame on us.

But things are getting a bit out of hand. House Speaker John Boehner, R-Ohio, recently announced that the Republicans were going to support an increase in the debt limit without any strings attached.

No spending limits, no concessions on new projects, no nothing.

The boy got exactly zilch for completely capitulating on increased national debt and borrowing. How did this guy get to be Speaker? Didn’t he realize that it was possible to strike a bargain with Democrats on spending?

Let’s put this into perspective.

The Wall Street Journal gave us a real cool graphic recently that showed the rising debt ceiling limit over the past 20 years. Through 2003, the debt limit was $6 trillion bucks. That’s a lot of money.

But the most striking thing is that the ceiling remained relatively flat from 1993 through 2003.

Sure, it went up from around $4 trillion to $6 trillion, and you accountants out there will scream, “that’s a 50 percent increase!” Fair enough.

After 2003, things get really scary. From 2003, the limit has gone up to $17.2 trillion.

And that does not include what Congress is planning to do. Punch those numbers into your calculator and you get a 286 percent increase.

Whaaaa?

Admittedly, this is a bipartisan problem. Over the eight Bush years, the ceiling went up $5 trillion. However, over the six Obama years, the ceiling has gone up $6 trillion and counting.

If you account for the last two years of Obama’s administration, the debt ceiling will go up $8 trillion total (and I’m being on the low side, since this year is not over).

What have we obtained for all of this additional spending? I figure that this increase is worth about $20,000 for every man, woman, and child here in the United States over the course of the Obama reign. For me and my wife that’s 40 large.

I should have a new Lexus or BMW sitting in my driveway. I look outside the kitchen window — nope, its not there.

Maybe I just got a new pool and hot tub for the backyard. Nope. Not there, either.

So where did all of this new spending get us? I hear about many people being out of work, behind on mortgages, and not able to feed their families.

If we are going to borrow a ton of money, shouldn’t we be able to see tangible things that this money is buying?

I don’t see it. This is like placing a huge second (or third) mortgage on your home and then having the bank say,

“Sorry, you don’t get the cash. But here is your payment book.”

And who is financing all of this debt? Basically, China. Yes, you remember them? These are the folks who are building completely empty cities that go unoccupied because no one can afford to live there.

China’s economy looks great on paper — for now. Let’s just wait and see what happens when that house of cards collapses.

Then what will they do with all of that U.S. debt they are holding? They will probably dump it as rapidly as possible to get cash to save themselves from the downward spiral that their artificial building boom has created.

Treasury bills and other financial instruments will crash in value, and retiree life savings will be wiped out overnight.

Forget about further borrowing. It will be impossible to do so without paying horrific interest rates.

All of this will lead us back to one simple concept. We cannot spend more than we make. We will be forced to face that reality, since the world will no longer be able to finance our largesse.

But if we face reality now and begin to force down our spending and the debt limit, we may be able to avoid — or at least decrease — the severity of the impending crisis.

But Speaker Boehner would rather back down and not fight. The perceived political advantage the Republicans will gain by avoiding a show-down with Obama is considered more important than the coming financial train wreck.

Heaven help us. Oh, look! Here’s more paint to watch drying and another Democratic Voices column!

Steve Lunetta is a resident of Santa Clarita and is stuffing the mattress with Krugerrands. He can be reached at slunetta63@yahoo.com.

 

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