The debt ceiling debate is hurling the nation toward a potential fiscal disaster. After June 1, the government risks not having enough money to meet debt and operating expenses. A default will undermine the dollar’s status as the world’s reserve currency and what is left of the world order.
The media are turning the debate into a circus by insisting that the only solution is to hand a blank check to the government and continue spending at will. Anything less is deemed dangerous.
Such thinking is absurd and catastrophic. What needs to change is not so much the budget but the mindset that saddles America with this mountain of debt.
A Reasonable Response
The Republican response to the debt ceiling crisis is reasonable. It does not deny the need to raise the debt ceiling under the present lamentable circumstances. It proposes minor restraints, guidelines and freezes on spending as a condition of raising the ceiling. The demands would merely return the government’s 2024 discretionary spending to fiscal 2022 levels. It would cap annual budget growth to one percent and bring back Clinton-era welfare work requirements.
Beyond the haggling, the most important part of the bill is the message that the present course of economic self-destruction has to change. Current spending levels are destroying the nation. Elected officials seem unable to think beyond the next election cycle. They must think of the nation’s common good and plan long-term. The GOP bill, titled the “Limit, Save, Grow Act,” at least takes some initial steps in the right direction.
Free Money to Invest in the Future
However, the liberal position regarding debt is full of wrong premises.
Leftists argue that with low-interest rates, it makes sense to invest in the future. “Free” money allows the government to spend at sustainable levels and even save money by spending now rather than when rates eventually go up.
This argument no longer holds since interest rates are rising. It becomes even more dangerous and expensive to borrow. For example, the cost of servicing the national debt now stands at $460 billion, well over half of the $842 billion defense budget for 2023. With or without interest, the principal still must be repaid. Money is never free.
The present administration has further increased the debt by several trillion dollars through its stimulus bills and spending packages. Even at low-interest rates, reckless spending injects vast amounts of cash into the system, causing inflation and the frenetic intemperance of unbalanced markets.
Modern Monetary Theory
Another wrong premise is an implicit and often explicit affirmation of Modern Monetary Theory (MMT). This warped thinking holds that a country can borrow indefinitely if it does so in its own currency. Since each country controls the minting of its currency, any crisis can be avoided by issuing new money to take care of all debts.
Thus, many liberals believe that a nation’s spending ability is limitless. It will have no consequences, nor should anyone even worry about debt. Warping the purpose of government from a promoter of the nation’s common good into a provider for the well-being of its citizens [and growing population of illegal aliens], those in power should spend whatever is needed to provide for all needs and entitlements. Government can borrow and spend at will.
However, a nation cannot always borrow its way out of a crisis. There will come a time of reckoning when people will question its value, causing a crash. The landing will not be a soft one.
Living Inside Constraints
This is not a discussion about money or the lack of it. The real issue is the liberal mindset, characterized by a refusal to live within constraints. Anyone who proposes sacrifice, no matter how small, must be demonized as heartless and hateful toward the less fortunate. This rejection of restraint in small things has metastasized to crisis levels in the world’s largest economy.
Thus, many liberals refuse to negotiate about the debt ceiling. They will not debate the merits of any proposals because any concession to sacrifice will give rise to yet more limitations. The blank check is the only acceptable solution because it makes all fantasies possible and all restrictions unnecessary.
The obsession with total unrestraint has the effect of turning the debate into something irrational. The enraged and radical left becomes willing to jeopardize the nation and the world economy to maintain its fantasy of unlimited free money.
Argument With Madmen
This craze to drive the economy into ruin endangers the nation. It creates an illogical debate where government spending cannot be challenged. This argument with madmen (and madwomen) threatens to sink the whole ship.
Tragically, it makes raising the debt ceiling necessary and even urgent, if possible, with conditions. The economy cannot be instantly repaired by turning off the money and jumping off the fiscal cliff. At the same time, a default’s impact will wreak havoc upon the world and favor America’s enemies.
As painful as it is to admit it, a deal is the lesser evil when negotiating with those madmen whose actions will sink the ship that set sail without lifeboats or life jackets.
The more important question is what will be done with the deal. Will it once more be used to kick the can down the road? Can it be used to inform a real debate?
Rejecting a Socialist Mentality and Embracing the Permanent Things
Instead of playing periodic games of fiscal chicken, America needs to question existential premises held by liberals and conservatives alike about the nature of government, life and liberty. Too many believe that life must be spent as if on a never-ending cruise underwritten by the courtesy of the federal government. At some point, the party must end.
America must reject the socialist mindset in which the government tries to be all things to all people through its largesse… and control. The nation must likewise reject the notions that restraint is always bad and sacrifice must be avoided.
This inquiry beyond an entitled self could provoke a reevaluation of what matters most in life. It could give rise to new dedication, commitment and loyalty to family, community and the Church, giving life meaning and purpose.
What is missing is what Russel Kirk called the “permanent things,” which are those norms of courage, duty, honor, justice and charity that owe their existence and authority not to big governments—but to God Himself. Until then, the nation will continue staring into the fiscal abyss.
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