Sunday Morning Gorilla

Sure, you're probably thinking I'm going to launch into another rant or diatribe about the 800 pound gorilla sitting in our respective sitting rooms.  No rant this morning.  Just a few factual observations; the first of which is that Trump and now Biden have avoided addressing the primary cause of our budget woes. 

When I tapped-out this post a couple of days ago It was basically impossible to read, view or listen to any media outlet without a reminder about the debt ceiling debate.

To be clear, this is a scary subject inasmuch as while our country has sufficient income to pay the interest on our debt (the bondholders) we also have a $1.5 trillion shortfall in 2023 to pay for all of the previous spending authorized by all the previous congresses and signed into law by all of the previous presidents.  From a purely technical perspective this isn't about a budget - this is about paying for the spending that we're already on the hook for.

That said, there is now a parallel discussion about the budget; which is a positive development.  Appropriations is where this discussion belongs; the debt ceiling is about paying for past obligations.  Yet make no mistake, unless the ceiling is raised we will have insufficient funds to pay for all of our lawful obligations including Social Security, Medicare and Medicaid.

Between you and me I don't believe there will be a default.  Anyone holding an IOU (government bond) will collect their interest on time and congress and the president will agree on some sort of scheme to address discretionary spending.  There is a high probability congress will convene some sort of Blue Ribbon Committee to study a weight loss plan for the 800 pound gorilla.  Of course I am notoriously famous for my bad predictions and while Kevin McCarthy is legislating he is bedeviled by a small number of crackpot members of his caucus who love outrageous tweets, reckless and inflammatory rhetoric and generally performative politics.  Just like the congressional nutjobs who extol the virtuousness of Vladimir Putin, they're cuckoo.  Why is it that some people elected to congress spout such outrageous  foolishness?  Is this a mechanism to fund raise?  Or a means to draw attention on cable programming?  Suck all the oxygen from the room?  Childish attention-getting behavior?  It's stupid, I'll never understand it and I digress.

We have a debt limit problem inasmuch as we continually borrow to make ends meet.  And the fundamental driver of our spending has been the growth of Social Security, Medicare and Medicaid.  Insufficiently funded, this leads to borrowing. This is the 800 pound gorilla.   Does it strike you as strange that neither Trump or Biden could be bothered  to acknowledge this?  You know who has talked about it?  Governor DeSantis.  But I digress. 

Source: Office of Management and Budget, 05.16.23

Consider this, in 2023 those three items will for the first time, will account for more than one-half of the entirety of the federal budget.  Furthermore, these three items account for just shy of 11% of our Gross Domestic Product (GDP).  In three decades this is projected to rise to 15% of our GDP. 

If you do the math the issue in our living room is we are presently borrowing to pay for an 800 pound gorilla today that could  grow to a 1200 pound gorilla in the years to come.  Creating a King Kong is not sustainable.

So, instead of fabricating a crisis and potential self-inflicted wound over paying for stuff that all of the foregoing congresses and presidents have passed into law we need to be holding a serious discussion about how we reform the largest programs in the budget.  Truthfully, the very best opportunity to reform our entitlement programs is when we enjoy rare periods of divided government.  Like right now.

No amount of shrinking the IRS, defunding the FBI, or clawing-back of COVID relief funds is going to plug a $1.5 trillion shortfall.  This is not rocket science.  This is simple math. 

While a handful of coconut congressional troublemakers might delight in gleefully blowing-up the economy, tanking the stock market, spiking our future borrowing costs and destroying everyone's carefully-built retirement plan with a default; I'm going to keep my eye on any serious zookeepers in congress and maybe a president who might take a stab at taming the growth of the gorilla and keep this country on a steady path of economic growth.  Yes, virtually every indicator supports the notion that the economy is presently doing quite well. Let's stipulate that too much debt can kill the economy. But that is another discussion for another day. 

This blogger isn't going to hold his breath over entitlement reform.  As it doesn't stand a chance of happening until after the 2024 election and we know who's in-charge of congress and the white house.

Until then, it appears that we've got bullshit culture wars to fight.  So, grab a cold bottle of Bud Light to assuage any festering election denial and my serious-bad predictions.

Whistling past the grave yard.