Friday, April 22, 2011

Beating the clock on hitting the ceiling

The most visually boring Web site in the country may well be the most important Web site in the country, thanks to the steady accretion of the national debt and the inexorable, mounting wall of fear that no one — in this generation or the next three — will escape its impact on our culture, our psyche and our lives. is the go-to site for all things related to the national indebtedness. It’s an online variation on the National Debt Clock that’s hummed for years at varying speeds on the side of a building in midtown Manhattan. And more. A lot more. The USDebtClock is an indicator — on steroids — of how much worse the problem of U.S. obligations (and our own) has grown in the United States, how it’s gotten so complicated that one array of numbers can’t contain everything that’s at stake in 2011.

The Web site’s main attraction is a home page whose explosion of rectangular calculator modules instantly compute, in real time, the various dimensions of the national indebtedness, everything from total U.S. debt, tax revenue, total consumer debt and total debt per citizen to gross domestic product, corporation assets, official number of unemployed, actual number of unemployed. Your dollar, where it goes, where it’s spent, where it stays and where it’s never around for very long, broken down six ways to Sunday.

You can bet your underwater mortgage that President Obama has it bookmarked on his computer in the Oval Office. House Majority Whip Eric Cantor? Maybe not so much. The numbers he’s paying attention to aren’t the billions breathlessly whizzing past on that Web site. Cantor’s focused on the numbers of votes he needs in the House to prevent the debt ceiling from being raised — ushering in what’s predicted to be a catastrophe of nightmare proportions.

What Cantor recently called a “leverage moment” for the Republican Party is dead ahead. But the demand for serious spending cuts doesn’t end with the GOP. Democrats want the national credit card limit reined in, too. And that fact sets the stage for what could be the first real bipartisan test of the will of our lawmakers to do something about the debt — not just nibble around the margins, but to take the problem head-on. How deftly, boldly and imaginatively President Obama navigates this problem, one that strikes at the heart of the heart of the American economy, may well define his presidential legacy.

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It’s already generally conceded, by people in a position to know, that the default on our obligations that would result if the debt ceiling limit of $14.3 trillion isn’t raised would be disastrous. Rick Mishkin, a former Fed Reserve governor, told CBS News as much on April 14: “This is what they do in countries like Argentina. This is not what we do in this country.”

Treasury Secretary Tim Geithner said it plainer still on CBS the same day: “It would shake the very foundation of the entire global financial system.”

Something needs doing right now to prevent what could be, sometime between May 16 and early July, the true literal tipping point for the American economy and the U.S. dollar’s vitality as the world’s reserve currency. The call for serious reform, the “leverage moment,” doesn’t conveniently break along party lines.

"What I've told anyone who will listen to me in Washington, including my leadership, is that I'm not going to vote for [raising the debt ceiling] unless there is a real and meaningful commitment to debt reduction," Arkansas Democratic Sen. Mark Pryor told the Political Animals Club at a meeting on Wednesday, as reported by Fox News.

And the line in the sand that starts within the Beltway isn’t staying in the Beltway. According to a new CBS News/New York Times poll released Thursday, “a clear majority of Americans” are against raising the debt ceiling. “Just 27 percent of Americans support raising the debt limit, while 63 percent oppose raising it,” the poll reported. “Support for raising the debt limit is just 36 percent among Democrats, and only 14 percent among Republicans.”

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What will be on the table is where to make the deep slashes to the nation’s spending. Will Democrats accept cuts in entitlement programs, education and other areas sacrosanct to liberals and independents? Will Republicans accept deep trims in the military budget, and can they live with higher taxes for wealthy Americans?

There’s thinking that at least some of the drama behind the issue is nothing less than the “political theater” Cantor condemned recently.

“While Republican leaders are reportedly acknowledging behind closed doors that they will not let the United States fall into default, they are considering demanding everything from a balanced budget amendment to statutory spending caps to a 2/3rds voting requirement to increase taxes,” CBS News reported Thursday.

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For the American people, the brain-locking immensity of the problem has led to an inability to distinguish between the deficit and the debt. The deficit is, on a fiscal-year basis, the gap between what the U.S. government takes in and what the government spends — what you and your partner wrestle with at the kitchen table every two weeks.

The national debt is the total of accumulated fiscal years of deficits — all the money that the government owes FY after FY. Add ‘em up and you’ve got an accurate snapshot of the national debt (for a fraction of a second).

The monstrousness of that amount has meant that, for American lawmakers, the weight of that debt has been kicked down the road for years. The scope of the problem stems in part from the foundational hubris that has to arise when one currency is the default generator for the world economy. When you’ve got the printing press for the world’s reserve currency in your very own basement, the whole concept of debt takes on a very different meaning. Until it doesn’t. Until, ultimately, “debt” means what it’s always meant.

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It’s that moment of the absolute, that reckoning, that’s on its way in. If this is political theater, the third act — will they beat the clock on hitting the ceiling? — is about to begin.

David Stockman, the former deputy White House budget director under President Reagan, said as much recently on MSNBC, when he described the U.S. financial crisis in terms as practical as they were frightening.

From his knowledgeable perspective, it’s finally ‘round midnight. The idea of shared sacrifice is no longer subject to debate.

“The wolf is at the door,” Stockman said. “We have gotten away with this massive deficit financing for years now, because most of the debt was being bought by the central banks. We’re now at the point where the Fed is going to stop buying the debt in June … the Japanese are going to start selling U.S. Treasuries, probably, not buying them … [and] the biggest bond fund in the world, PIMCO, announced over the weekend that they’re short the Treasury bond. It’s an indication that this problem is coming at us very rapidly. It’s here.”

Image credits: National debt maladjusted for inflation: All other images from USDebtClock.  From top to bottom, the amounts shown are a real-time reflection of the public debt as it climbed between 4:16 and 4:55 this morning: give or take ... $63 million in 39 minutes.

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