The Unstoppable March Toward National Bankruptcy

Who's To Blame?

By Mark Hendrickson

The opening line of the Beatles’ iconic “Sergeant Pepper’s” album is echoing in my thought: “It was 20 years ago today…” Well, not quite to the day, but 20 years ago I published an article titled, “$4 Trillion and Counting.” In it, I despaired at the rapid increase in the national debt from its first-ever crossing of the $1 trillion mark during the Reagan presidency to four times that gargantuan amount in only a decade.

Today, a mere two decades later, we have quadrupled the national debt again, to $16 trillion. (That figure represents the official national debt, but if you add the many “off-budget” items and all the liabilities that are conveniently omitted from government “accounting,” then it’s multiples of the official number.)

Who is to blame?

Let’s start by picking the low-hanging fruit: “progressives,” a.k.a, Democrats. The Dems always want more federal spending, higher taxes, more government. Indeed, there is no major area of economic activity over which they want less control. Whether it’s food, energy, housing, health care, retirement, finance, transportation, education, etc., they always want to expand the government’s scope and power.

The Democrats have led the way toward bigger government. They always succeed in getting Republicans to blink every time the debt ceiling is reached, because whereas Republicans are ambivalent and divided about Big Government, progressives are united and utterly committed to it. They do not vacillate; the Republicans do, and so they buckle.

Surely, though, now that we are racing toward a jarring fiscal cliff, the government’s credit rating is at risk, and major entitlement programs are on a collision course with insolvency, Democrats will compromise to fix these problems before it’s too late, won’t they?

The short answer, dear reader, is “No.” On the contrary, the threat of insolvency is something that progressives welcome. They view it as a means to an end.

The key to understanding this dynamic is to recognize what progressives want. They want government control over economic matters, and so they adopt whatever strategies will further that goal. We saw this strategy in action with at Fannie Mae and Freddie Mac. When the two mortgage giants were about to implode from insolvency, Congress simply nationalized them, making the taxpayers responsible for their financial obligations.

Do you think Barney Frank, Nancy Pelosi, and the other “progressives” were sad about that pair of nationalizations? It is more likely that they popped open champagne bottles and celebrated, for now they had achieved government control over the gigantic home mortgage business.

What do you suppose Democrats will propose on the day that funds run dry for Social Security or Medicare? They surely won’t say, “Sorry, folks we’re broke; end of program.” Instead, in the case of Social Security, they will try to use the emergency as the pretext to nationalize private retirement accounts a la Argentina (they’ve already held congressional hearings about taking this step); in the case of Medicare, they will do what many of them already have stated they want to do—nationalize it.

It doesn’t even matter to the Dems if the whole government goes bankrupt. Look at Senate Majority Leader Harry Reid’s obstinate (and criminal) refusal to let the Senate vote on a federal budget. That indicates that the Dems have gone “all in” on their diabolical “bankruptcy as the road to nationalization” strategy. They will tell a scared public that the government will continue to take care of them, the Republicans will be afraid to oppose “a strong government response” to the fiscal emergency, and the government will take over large swaths of the private sector.

Now for some bipartisanship: The Republicans must share in the blame for the government’s fiscal woes. Other than Ron Paul, what Republican has refused to vote for expansions of government into numerous areas not enumerated in the Constitution? Yes, Republicans generally have wanted to grow government at a slower rate than the Democrats, but they still have supported its continued growth. The most “conservative” long-term fiscal plan that has gained any traction in the Republican Party has been Rep. Paul Ryan’s plan that would increase the national debt by “only” $4 or $5 trillion over the next decade. If that is the most “radical,” “right-wing” “anti-government” plan on the table, then clearly the flood of red ink will continue to swell (that is, until the Federal Reserve Note tanks and the system cracks up).

Having blamed both Democrats and Republicans for our impending national bankruptcy, is there anyone else left to blame? Yes, indeed, now we come to the principal culprits: “We, the people.” It’s very convenient to blame politicians for our fiscal wreck, but the bottom line is that a lot of Americans want the government to do things for them, and so they elect big spenders. Perhaps Joseph de Maistre (1753-1821) was correct when he wrote, “Every country has the government it deserves.”

The reason our government is broke is staring most Americans in the face whenever they look into a mirror. Too many of us have acquiesced to, if not agitated for, a corrupt political system. As I wrote in that article 20 years ago, “Americans must return to the traditional principle of respecting the property of others, rather than seek to obtain a portion of it through government … Until then, four [now 16] trillion dollars is just another milestone on the way to economic ruin.”

Whom should we blame for the nightmare of runaway spending and debt? The majority of Americans in both major political parties.