Fiscal Reality

Whether we choose to accept it or not, there is one indisputable truth.  The United States’ role as the dominant world power will come to an end.  We will not hold this position forever, for in the recorded history of mankind no empire has survived forever.  The only question is what will cause us to become a second-tier nation?

After the Second World War we, along with the other victorious allies, created the United Nations.  The stated intent was simple, to give a forum for nations to talk, resolve differences and avoid war.  Anyone who has paid attention to the last 75 years should know how miserably it has failed on that last item.  In fact, only four years after its creation the UN mobilized a force to fight the communist takeover of the Korean peninsula.  Today the UN serves as a forum for large blocks of countries allied with various other powers to condemn the western world.  It also serves as a potential replacement for individual governments if the world were ever to come to agree on a one-world government, the problem in this aspect is how to manage the wealth of the world on a global basis, when so many have their own opinions on how they should be rich, but everyone else should share whatever is leftover.

As we crank up the printing presses for the second time this century to restart the economy and save the American way of life the first question I have is where does the actual substance of this wealth transfer come from?  Our currency is not based on real or tangible assets, rather it is based on the good faith the Government will stand good for the debt.  In the second World War, when we mobilized the nation to fight the threat of the Axis powers we borrowed from the American people.  Those who were around (I was not) may remember the bond drives, the offer to have towns or businesses buy a plane, a tank, or a ship.  We collected scrap metal, we (the government) limited the products we could buy, and we diverted all those resources to fight the war.  The government spent the next 50 years paying off that debt while accumulating more modern debt.  Kind of like the guy who gets a new credit card to pay off the old credit card and whose debt limit increases because banks see him as a good risk.  Until one day he can’t and the house of cards he built comes tumbling down.

I smile when I see my Democratic friends post about how unprepared we as a nation were for this pandemic, or how if we had universal health care we would be so much better off.  It is a sad smile, for their statements fly in the face of all available evidence. 

Let’s think about preparedness for a moment.  Each and every year this nation faces some kind of major catastrophe and it doesn’t matter who is President, in the eyes of the opposition we will always be unprepared.  It may be a major hurricane, a state ablaze with wildfires, the Great Plains states devastated by tornados, or earthquakes caused by the movement of the tetanic plates along the Pacific rim or in the Caribbean.  We as a nation, and especially our politicians, respond to the crisis before them.  The need is obvious, we must address the crisis at hand with the resource available and worry about the purchase of stuff for the next crisis when we have the time and resources.   

Unfortunately, for most of those in the Executive Branch the fact Congress can’t do its real job of passing a budget each year before the year starts it means there is never enough cash to do the nice to do things, and barely enough to do what the government must do.  Congress also has an endearing quality of telling the States what they must do, often without providing the states the funds to do it.  This puts the state governments in the potentially embarrassing position of not having all the resources available the Federal Government has mandated.

Now we come to the ideal of Universal Health Care.  Of all the countries currently affected by the COVID-19 virus, the U.S. is the one major world power without such a system.  For those countries with systems can we really say they were either better prepared or better able to handle the epidemic?  Only a scant four weeks ago people were pointing out how many more beds Italy had available when compared to the U.S.

Two weeks ago, people were saying we were totally unprepared with test kits to determine who had the virus and who didn’t.  Of course, China stepped in to offer its technical support and provide hundreds of thousands of kits around the world.  Unfortunately for the world, the accuracy of their test is in the 30-50% range and as a result, several nations like Spain and Germany are now abandoning them.

But I digress.

The issue I started with was how will we pay for the $2-trillion we’ve just authorized the government to spend.  It is a question I can ask, without a clue how to answer, but somewhere in the not too distant future some Congress and President will be forced to.  The question is what becomes of the United States when that day of reckoning comes?

p.s.  I may be alone in this opinion but I agree with Representative Thomas Massie, (R-KY) this historic assumption of debt should not have passed the House of Representatives with a simple voice vote where no individual is directly accountable for the decision.