So, after Congress and the President agreed this week to increase our national debt, what happened? The stock market tanked, and our nation’s credit rating was downgraded. Good. Don’t get me wrong — it’s not “good.” It eventually means higher interest rates on all forms of loans to individual Americans (credit cards, auto loans, mortgages). By “good,” I mean I’m glad business didn’t just roll right along as usual after the debt-ceiling debacle such that we could all have retreated easily into our “Folie a Millions,” our national delusion that there’s no limit to the amount of borrowing we can do. We shrinks know that what adults, just like children, need to hear isn’t always what they want to hear. What Americans heard this week, from the stock market and from Standard & Poor’s (the credit-rating agency), was what we needed to hear.
Compare our government to an individual American earning $50,000 per year who’s $350,000 in debt already and just got a credit-limit increase to borrow another $50,000 over the next year with plans to borrow even more after that. It’s unworkable. It’s unsustainable. At some point, it’ll become unreasonable (if it’s not unreasonable already) to expect that he’s going to be able to make all of his payments when they come due, even if he stays really healthy and works really hard indefinitely. Sooner or later, lenders simply aren’t going to loan any more money to this guy, at least unless there’s a huge interest rate attached to balance out his risk of default. Our government is like a morbidly-obese guy with grandiose delusions that he’s just “pleasantly plump” and that he can keep packing on pounds indefinitely — both need serious psychological intervention and serious physiological intervention.
And make no mistake, the problem is not that anyone — rich, poor, or in between — is sending too little money to Washington. We could theoretically send all of our incomes to Washington, and the government would spend all of that money and more. (The Soviets tried that, remember?) The problem is that there’s way too much money in Washington — too much taxation and too much borrowing. Our government is doing way too much and spending way too much. I’ve been writing and talking about this for years (for a sampling, see 7/14/11, 4/18/11, 6/1/10, 3/4/09, and 11/18/08 in the Archives), and I hope this past week’s developments will help more people to open their eyes and years.
We Americans first have to get our minds right about what we truly need from our government — what’s the “meat” of our government that we must have to survive as a nation, and what’s the “fat” that we could live (and even be better off) without. Once we’ve figured that out, we’re way beyond being able to trim this government down by simply putting it on a weight-loss “diet” like Congress and the President pretended to do this week. In next year’s elections, we need to elect people who’ll give it both liposuction (deep, deep budget cuts) to get it down to a healthy size in the short term and a gastric bypass (a balanced-budget amendment combined with a flat tax system) to keep it healthy in the long term.