The recent turmoil surrounding the government’s debt ceiling revealed an unexpected source of entertainment, showcasing a series of comedic performances that could easily be mistaken for a political farce. While it’s a relief that a default was averted, we can’t help but reflect on the amusing antics that ensued.
President Obama, for example, was nothing short of captivating. His comments had us in stitches. Can there be anyone more comically misguided in such a high position?
Every glance at him brings forth uncontrollable laughter, and each statement seems to push us closer to the edge of our seats.
“Make no mistake – for those who reflexively opposed tax increases on anyone, a lower credit rating would be a tax increase on everyone,” Obama warned on Sunday, showcasing an impressive feat of backward reasoning typical of a progressive mindset.
And then there’s House Speaker John Boehner. He comes off as relatively honest compared to many in Washington, yet his background from southwestern Ohio made it challenging for him to negotiate effectively with an opposing faction. Perhaps we shouldn’t blame him for this, but the endless rejections of proposals did provide some good humor.
The rest of the ensemble – Mitch McConnell, Harry Reid, Chuck Schumer, and more – could easily fill the roles of comedic characters in this political theater.
Yet behind the laughter, the eventual decision to raise the debt limit – assuming it passes the Senate as expected – signifies another setback for those keen on resisting government overreach, central planning, and limitations on personal freedoms. Here’s why this is significant:
Government Consumption
Many reports hailed the ‘historic agreement to avert default’ as a monumental achievement. As news broke on Sunday night, Asian markets surged; the Nikkei 225 rose by 133 points. News of this nature spread westward like a wave of optimism. European markets, including Britain’s FTSE 100, quickly gained nearly 100 points before gravity took its toll.
However, by the time dawn broke over Lower Manhattan, the initial excitement had faded, revealing a sobering reality akin to the disillusionment of a New Year’s resolution shortly after it’s made. After an initial spike, traders collectively realized that raising the debt ceiling wouldn’t actually benefit the economy.
At the opening bell, the DOW climbed 138 points. But that was before the Institute for Supply Management reported a decline in its index of national factory activity, dropping from 55.3 in June to 50.9 in July – marking its lowest point in two years and significantly lower than the anticipated 54.9. In response, the DOW quickly fell below 12,000 before managing a slight recovery to finish with a 10-point loss on the day.
Here at the Economic Prism, we find it difficult to understand what all the fuss was about. Contrary to what you may read in the media, the debt ceiling deal is not the salvation that Washington would like you to embrace.
Keep in mind, the government does not produce anything of value. In fact, it does the opposite – it consumes. Moreover, the government appropriates funds from hardworking individuals and spends those resources in ways that aim to reshape society according to its vision.
Even more troubling is that when the government runs out of its own funds, it doesn’t cease its spending. It continues to consume by borrowing, effectively robbing future generations to benefit its allies today. A default might have halted this unscrupulous cycle.
Deliver Us From Idiots
Congress appears oblivious to the reality that raising the debt limit doesn’t address the underlying issue. Continually amassing debt can only reach a certain threshold, which will occur when the size of the U.S. Government surpasses the capacity of all global financial resources to support it. That will be the true moment of reckoning, and Washington will be powerless to intervene.
Undoubtedly, a default would cause significant disruption. Over the past century, the government has distorted the economy in myriad ways as it has swollen in size. The consequences could be severe, with unemployment potentially escalating from its already high levels.
Yet beyond the immediate suffering it could bring, a default could liberate us from the incompetence of our leaders. For the first time in six generations, government would shrink rather than expand. As the government contracts, individual liberties would expand, communities would thrive, and, following some initial struggles, healthy economic activity would resurface.
We believe that liberation from the ineptitude of government is a trade worth making. Those who are willing to work hard, save, invest, dream big, and take actionable steps towards their goals will reap numerous rewards. Meanwhile, others will struggle to keep up.
Sincerely,
MN Gordon
for Economic Prism