This session of Congress is set to tackle America’s $32 trillion debt problem. It’s not really a “problem” in the sense that Congress is serious about addressing the issue. The Congressional record speaks for itself: the US has averaged a deficit of $1.2 trillion in each of the last ten years; the Biden administration justified government spending as a means of driving down prices in an inflationary environment; and the dollar has lost 85 percent of its value since the US abandoned the gold bullion standard in 1971. Nevertheless, to the chagrin of lawmakers, there is a legislative artifact in place from 1917 that requires Congress to dutifully raise the debt ceiling before their record spending-spree can continue apace.
After some political grandstanding from both sides, the debt ceiling will be raised and Congress will kick the can down the road. Again. Politicians on both sides will celebrate, likely with calls for new spending on public education, health care, or some such, undoubtedly sold to taxpayers under the banner of something called the “fiscal responsibility and debt reconciliation act.”
That’s the upside down world we live in.
This tendency for politicians to ignore reality and please voters at all costs is what I term the “policies of kindness.” These days, politicians never want to tell voters a difficult truth. They rarely ask for sacrifice, or lead sacrificially. Instead, they want to be seen as furthering social justice, which really means doing whatever makes them look moral and virtuous. But “nice” most all. Courtesy of central banking, they can do all of this do-gooding on the backs of those who aren’t even been born yet. Debt.
There is a proverb that says a wise man will first observe what his neighbor does and examine the fruits, before making the same decision. He sees, for example: “a little sleep, a little slumber, a little folding of the hands to rest – and poverty will come on [him] like a thief and scarcity like an armed man.” In the same way, we can see the ultimate ends of debt, and the fruits of politicians living in a fantasy world in real time. And they’re anything but nice: inflation, austerity, and social upheaval.
Consider Nigeria, the largest economy in Africa. After years of spendthrift governments – all in the name of social justice – Nigeria finds itself in a debt crisis. Today, 96 percent of government expenditures go towards financing the debt. As one of the least free market countries in the world, the fruit has been 22 percent inflation, 33 percent unemployment, and widespread poverty. Saddled by these difficult times, Nigeria can’t easily print money to pay off its creditors, as that only leads to more inflation and greater economic instability. In the face of high interest rates, the country can’t even borrow its way out.
The story in Argentina is similar. Despite three defaults in the last twenty years, the country eschewed any meaningful market reforms and spending continued. With price inflation now surpassing 100 percent, Argentina is facing yet another debt default. To prevent it from bleeding dollars, the country has adopted fifteen different exchange rates. Growth has screeched to a halt. Bailouts from the IMF require Argentina to get its financial house in order. Yet spending cuts will cause entitled voters and institutions to revolt. Stimulating the economy necessitates the printing press to pay the bills. An economic prison of its own making.
Now, you might be thinking: “well, those are the exceptions.” Sadly, millions in Brazil, Bolivia, Greece, Italy, Lebanon, and Venezuela are in a similar boat. And it is not just there. India’s debt is borderline junk. Highly indebted Europe may be on the cusp, with just 1.2 percent annual growth over the last two decades.
The point here is this: after years of abdicated leadership there comes a time where, fittingly, there’s no longer any need for leadership at all. You see, when you kick the can down the road, at some point the can stops in your front yard. When that happens there’s nothing to do. There are no policy solutions to move beyond the financial and social wreckage. Decisions are simply imposed by creditors or driven by unavoidable economic realities. Only suffering, hardship, poverty – the immorality – remains. Just look around, you can already see it happening. You can hear the pleas of millions. They call out to lawmakers ten, twenty, and fifty years past: “spare us from your kindness.” Alas, it is too late.
Congressional leaders who put off the day of reckoning over the debt will be championed. The media will exalt their kindness. Their intentions beyond reproach. But history will likely tell a very different story, one pervaded by cowardice, foolishness, and theft.
Todd Gabel is a clinical associate professor of economics at the University of Texas (Arlington) and senior fellow at the Fraser Institute, a Canadian-based think-tank.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.