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17-10-21, 15:59
Biden’s trillion-dollar spending spree will lead to financial collapse
By Kevin D. Williamson
October 16, 2021
Social Security is the single most expensive program the federal government runs. By itself, Social Security already accounts for a quarter of every dollar Washington spends.
And even all that spending isn’t enough: Social Security’s “unfunded liabilities” — how much money the government would need today to make up the difference between the money that will be paid into Social Security in the future and the benefits that have been promised — is about $40 trillion.
How much is $40 trillion? It is all the money in the world — literally: All the cash in circulation, plus all the deposits in checking accounts and savings accounts, adds up to about $40 trillion. That is a big hole to climb out of.
And now Social Security payments are about to go up by 6 percent. The reason? Social Security payments are linked to inflation.
When prices go up, so do Social Security payments. Seniors will enjoy the extra money, but problem is that raising Social Security payments to match inflation is likely to cause more inflation, necessitating another increase in Social Security payments, which will cause yet more inflation. Et cetera.
In normal times, when there is a sudden influx of new money into the economy, businesses respond by increasing production, assuming that consumers will want to spend that money on new products or on more of what they’re already buying. But right now, a combination of factors — supply-chain disruptions, the global shipping backlog, factory closures abroad, labor shortages — have businesses struggling, often unsuccessfully, to keep up with current demand.
So, instead of producing more, they raise prices. That’s what happens when you get more money chasing the same supply of goods — or a smaller supply.
You can see the evidence of this all around you: In markets ranging from pickup trucks to luxury wristwatches to toys for Christmas, prices are sky-high and inventories are low or nonexistent. You can expect to wait months for delivery of a Toyota 4Runner, and some people who ordered 2021 models months ago will never receive them. But the crunch is not just a problem for people buying nice new cars: Costco has reimposed purchasing limits on bottled water and toilet paper.
And then there’s the debt.
Just as inflation can cause more inflation, one of the biggest drivers of today’s budget deficits are yesterday’s budget deficits. The federal government is currently spending more than half a trillion dollars a year on interest payments for money borrowed in the past — money that already has been spent. That’s more than we spend on any cabinet agency except the Department of Defense — and the cost of interest payments is getting close to that. We are something like the fool who uses a new credit card to pay his old credit card without ever paying down the debt, instead adding to it every day.
No one will take responsibility for this.
The annual cost of our interest payments grew by $100 billion over the course of Donald Trump’s presidency, while Joe Biden and his congressional enablers are working overtime to do even worse. Republican Congresses and Democratic Congresses both have been to blame.
When Donald Trump was elected in 2016, he was, to put it mildly, a different kind of Republican. The self-proclaimed “King of Debt” had very little interest in balancing the budget, and he was adamantly opposed to reforming Social Security and other popular middle-class entitlements, in spite of their ruinous cost. Trump did not cause the deficits and unfunded liabilities that piled up during his presidency, but he did give Republicans permission to quit pretending that they care about balancing the budget and instead join with the Democrats in the spending orgy.
The result is that there is at present no one of any consequence in Washington with a mind to set our fiscal affairs in order.
When all the money in the world isn’t enough to make good on our promises, it is time to think fearfully about Stein’s Law, named for economist Herbert Stein: “If something cannot go on forever, it will stop.”
Our budget game is one part musical chairs, one part Russian roulette, and somebody is going to have to lose when the music stops.
Kevin D. Williamson is the author of “Big White Ghetto: Dead Broke, Stone-Cold Stupid, and High on Rage in the Dank Woolly Wilds of the ‘Real America’.”
By Kevin D. Williamson
October 16, 2021
Social Security is the single most expensive program the federal government runs. By itself, Social Security already accounts for a quarter of every dollar Washington spends.
And even all that spending isn’t enough: Social Security’s “unfunded liabilities” — how much money the government would need today to make up the difference between the money that will be paid into Social Security in the future and the benefits that have been promised — is about $40 trillion.
How much is $40 trillion? It is all the money in the world — literally: All the cash in circulation, plus all the deposits in checking accounts and savings accounts, adds up to about $40 trillion. That is a big hole to climb out of.
And now Social Security payments are about to go up by 6 percent. The reason? Social Security payments are linked to inflation.
When prices go up, so do Social Security payments. Seniors will enjoy the extra money, but problem is that raising Social Security payments to match inflation is likely to cause more inflation, necessitating another increase in Social Security payments, which will cause yet more inflation. Et cetera.
In normal times, when there is a sudden influx of new money into the economy, businesses respond by increasing production, assuming that consumers will want to spend that money on new products or on more of what they’re already buying. But right now, a combination of factors — supply-chain disruptions, the global shipping backlog, factory closures abroad, labor shortages — have businesses struggling, often unsuccessfully, to keep up with current demand.
So, instead of producing more, they raise prices. That’s what happens when you get more money chasing the same supply of goods — or a smaller supply.
You can see the evidence of this all around you: In markets ranging from pickup trucks to luxury wristwatches to toys for Christmas, prices are sky-high and inventories are low or nonexistent. You can expect to wait months for delivery of a Toyota 4Runner, and some people who ordered 2021 models months ago will never receive them. But the crunch is not just a problem for people buying nice new cars: Costco has reimposed purchasing limits on bottled water and toilet paper.
And then there’s the debt.
Just as inflation can cause more inflation, one of the biggest drivers of today’s budget deficits are yesterday’s budget deficits. The federal government is currently spending more than half a trillion dollars a year on interest payments for money borrowed in the past — money that already has been spent. That’s more than we spend on any cabinet agency except the Department of Defense — and the cost of interest payments is getting close to that. We are something like the fool who uses a new credit card to pay his old credit card without ever paying down the debt, instead adding to it every day.
No one will take responsibility for this.
The annual cost of our interest payments grew by $100 billion over the course of Donald Trump’s presidency, while Joe Biden and his congressional enablers are working overtime to do even worse. Republican Congresses and Democratic Congresses both have been to blame.
When Donald Trump was elected in 2016, he was, to put it mildly, a different kind of Republican. The self-proclaimed “King of Debt” had very little interest in balancing the budget, and he was adamantly opposed to reforming Social Security and other popular middle-class entitlements, in spite of their ruinous cost. Trump did not cause the deficits and unfunded liabilities that piled up during his presidency, but he did give Republicans permission to quit pretending that they care about balancing the budget and instead join with the Democrats in the spending orgy.
The result is that there is at present no one of any consequence in Washington with a mind to set our fiscal affairs in order.
When all the money in the world isn’t enough to make good on our promises, it is time to think fearfully about Stein’s Law, named for economist Herbert Stein: “If something cannot go on forever, it will stop.”
Our budget game is one part musical chairs, one part Russian roulette, and somebody is going to have to lose when the music stops.
Kevin D. Williamson is the author of “Big White Ghetto: Dead Broke, Stone-Cold Stupid, and High on Rage in the Dank Woolly Wilds of the ‘Real America’.”