There is a purportedly existential crisis under way involving the possibility that the United States of America, until recently the world’s hegemon, lacks enough funds to pay its current debts. Some wonder how, if that’s the case, the Biden administration can be so generous to the Ukrainian military and whether, such “generosity is not largely responsible for the current situation. Others would note that were this a down and out debtor looking to refinance his or her debt, no competent financial institution would step up to the plate. The International Monetary Fund most probably would not, nor the World Bank (at least if it involved any regular country whose currency did not currently, at least for now, dominate international trade).
The Biden administration is broke and its looking for a bailout, … again. But then again, the same has been true of other administrations, Republican as well as Democrat. This would be the 81st or 82nd such existential increase in the nation’s borrowing authority.
Public borrowing by the United States is never logical given that the funds it borrows are usually issued by that same government, at miniscule rates, to the banks that then lend them to it. If the government just had some responsible mechanism for issuing its own currency directly to pay its debts, it would avoid the related, crushing interest payments. But then, where’s the fun in that, or the profit.
The Biden administration will get its way, at least in part, increasing the already boated 31.5 trillion dollar national debt by another trillion and a half, but in doing so, several important points have slipped out that should have an impact on 2024 elections from dog catcher to president. The points have to do with priorities and where we stand in that respect, but also with the cynical decision to raise the debt limit so that its impact on the 2024 federal elections will be minimized. Are we really that stupid?
But, as outrageous at that first point is, there is one more outrageous, by an immense magnitude. The issue of priorities.
The Biden administration has made it clear that if there is insufficient cash to go around, first priority in payments will be to holders of United States debt securities, many of them banks and financial institutions which, as indicated above, leveraged the purchase of government securities using lower interest loans from the Federal Reserve.
At the end of the line, are Social Security recipients, although perhaps that “threat” was mainly suggested to generate massive fear among a vulnerable segment of the electorate, “encouraging” them to force their representatives in Congress to back down. The cynicism in that ploy should have serious, indeed, permanent political consequences. Social Security is not a welfare program, it is a compulsory investment program with penal sanctions for failure to comply, not all that different, when one considers it, from an organized crime protection racket enforced by hired goons, but an investment program in which one does not get to make the investment decisions. They’re made by the Federal Government, “for our own good”. Just like the phrase “I’m from the government and I’m here to help you” the former phrase generates well deserved ridicule.
Investors “deserve” their profits purportedly because they assume voluntary risks. When the “risk” is removed, they are no longer investors, they are instead an offshoot of organized criminals, like loan sharks. Social Security recipients did not have the “option” of not “investing” and thus, under no circumstance, in a democracy based on law, should they ever be placed in a lower priority than other creditors of the United States. That does not mean that Social Security is absolutely guaranteed. Were the United States, for reasons beyond its control, to find itself with no funds to pay anyone, then Social Security recipients would have to suffer along with everyone else. But to place purported investors at the head of the line is an outrage.
It’s an outrage that “investors” would be paid before military veterans or serving military personnel as well. In fact, it’s an outrage that purported “investors” would be paid ahead of any other class of creditors. In any other setting, holders of unsecured debt would find themselves at the end of the line, but not with the Biden administration in charge of the decision. It knows on which side its bread is buttered, it knows from whence its political “contributions” come, and it knows to whom its real loyalties are owed, and it’s clear that it’s not to “We the People”. All the old canards that the Democratic Party is the party of common men and women, of the downtrodden, of labor and of the retired went out with the sewage when the Clinton administration (of which the Biden administration is and the Obama administration was a continuation) assumed control of that political party in 1992.
Not that the GOP is much better, or at least the traditionalists in the GOP. Who can tell what its populist wing (now apparently that party’s largest segment) would do. That segment’s leaders talk a different game, but they were outmatched and outmaneuvered in 2020 by the state within a state many refer to as the Deep State, and which is the investment community’s enforcement arm. But if populists from both the left and the right opened their eyes and took a whiff at the odor emanating from the District of Colombia, if they ever joined forces (and the outrage currently being perpetrated might be a sufficient catalyst to break the bonds that keep then apart and at each other’s’ throats), then perhaps a whole new set of government representatives and functionaries would get their priorities straight.
Something to seriously consider every time you head to the ballot box in the future, assuming that votes are still actually taken into account.
© Guillermo Calvo Mahé; Manizales, 2023; all rights reserved. Please feel free to share with appropriate attribution.
Guillermo (“Bill”) Calvo Mahé (a sometime poet) is a writer, political commentator and academic currently residing in the Republic of Colombia (although he has primarily lived in the United States of America of which he is also a citizen). Until 2017 he chaired the political science, government and international relations programs at the Universidad Autónoma de Manizales. He is currently the publisher of the Inannite Review, available at Substack.com. He has academic degrees in political science (the Citadel), law (St. John’s University), international legal studies (New York University) and translation and linguistic studies (the University of Florida’s Center for Latin American Studies). However, he is also fascinated by mythology, religion, physics, astronomy and mathematics, especially with matters related to quanta and cosmogony. He can be contacted at firstname.lastname@example.org and much of his writing is available through his blog at https://guillermocalvo.com/.