North Star Writers Group

This week, Congress approved raising the debt limit for Fiscal Year 2006 to $8,526,578,000,000. That's over eight and one half trillion dollars. Go ahead, let that number sink in - if you can. I understand that it's scarcely comprehensible. It's the kind of number usually reserved for calculating distances between stars and such. Astronomical is truly the correct adjective with which to describe it. Yet that is the amount of money presently owed by the U.S. Federal Government to its various creditors. It's the amount of money Congress has borrowed over the last 40+ years, plus interest. (This is on top of all the spending funded directly by tax revenues.)

This functions no differently in principle than a credit card bill. Every period of time that goes by, Congress simply pays the minimum required (i.e. treasury bonds and notes that come due) and otherwise ignores the problem, save to give itself permission to borrow still more money to spend by raising the aforementioned debt limit. The projections get even worse:

Fiscal year 2006: $8,526,578,000,000

Fiscal year 2007: $9,190,311,000,000

Fiscal year 2008: $9,766,883,000,000

Fiscal year 2009: $10,302,957,000,000

Fiscal year 2010: $10,815,812,000,000

Fiscal year 2011: $11,355,281,000,000

But hang on--we're not done with this financial horror show just yet. In fact, it gets exponentially bigger. The latest report from the Social Security and Medicare trustees show the two entitlement programs to have a combined $81,000,000,000,000 in unfunded obligations. (Roughly $12 T for the former, $68 T for the latter.) "Unfunded obligations" is just a fancy phrase that simply means "even more debt." So the true amount of money owed by the U.S. Federal Government is in fact 10 times the amount on the budget, or heading upwards of $90 trillion dollars. Ninety Trillion in debt. If eight and a half is astronomical, what does that make 90? Galactic? (And I feel fairly safe in presuming that you can't let that sink in.)

Obviously, there isn't enough money in the galaxy to pay all this back. It is simply never going to happen. One could start all the printing presses at the U.S. Mint running 24x7, 365 days a year, churning out $100 bills from now until then (the skyrocketing inflation it would cause notwithstanding) and it wouldn't be enough. As such, those creditors are going to come calling, if not treasury note holders on the budget-related debt, then certainly when hordes of retiring baby boomers start trying to cash in their entitlements.

The symptoms will actually begin being felt earlier than that, much like the wind picking up before a thunderstorm, when FICA and payroll taxes will have to start covering entitlement payments rather than going into the Social Security trust fund to be promptly looted and spent by Congress and replaced with a worthless (or soon-to-be) Treasury note. Which means the existing programs funded by these monies will suddenly either need a new funding source (i.e. raised taxes) or cease to exist. The problem will continue to grow with the escalating entitlement obligations until it consumes the entire federal budget--every last program.

And that's when this ticking fiscal time bomb will finally explode once and for all--the Fed will start defaulting on its obligations. It will be bankrupt and insolvent. The only use for treasury bonds, bills, notes and entitlement checks will be as supplemental toilet paper, starting campfires, or scratch paper. Everything we've expected to redeem for cash will be absolutely worthless. And the resulting public outcry will be like nothing we have ever observed before. The anger will be palpable; the search for a scapegoat to blame and punish will be relentless.

As much as I want to see smaller government, I'd rather not see it happen in such cataclysmic fashion. But I just don't see us having the will to end our addiction to spending; if anything, it'll be the $90 trillion "overdose" that will kill big government once and for all. As we've seen, even the tiniest attempts to begin to wean recipients of government largesse off their programs result in screams, cries, and wails of death and destruction that shall surely befall as a result. (Much like an addict going through withdrawal pangs, to continue the metaphor.) Given that, I shudder to think what the response will be to an overnight bankrupting of the whole enchilada. (Or quitting "cold turkey," as it were.)

It doesn't have to turn out this way, of course. There is still time to avoid fiscal disaster. But it's going to take an intervention like none we've ever seen before. America must kick its spending addiction, and fast. The first step is admitting we have a problem, and so far only one listless attempt at that has been made. And President Bush got soundly thrashed for it by the chin-deep-in-denial incumbent politicians of both parties who can only see next November's re-election votes to be bought. I doubt he'll attempt it again. (His non-existent veto pen hasn't helped matters any, either.)

So here we are, on the precipice. The only thing working for us is that we know it's coming, so some of us can put on a parachute before we go off the cliff. Will we be able to avoid needing them? One can only hope so.

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