Marc Nuttle’s debt wall and why Barack Obama’s presidency may crash into it
The riots in Greece point to President Obama’s single biggest re-election problem.
To see why that’s true, consider the nature of the demonstrators. Think My Big Fat Greek Wedding, but without the music score and dancing.
Astonishingly, a great many of the demonstrators come from the middle class — seniors whose retirement benefits are on the rocks, working moms and dads suffering record high taxes and 16% unemployment, government workers who’ve taken a pay-cut of 15% or more, small business owners whose businesses are failing in record numbers, and, of course, the usual suspects: the leftists and anarchists who just can’t pass up an opportunity to throw rocks and shout dumb slogans.
In short, those rioting in Greece look a lot like the voters who elected President Obama just three short years ago.
In fact, among the more interesting side stories involving the current Greek “troubles” are those about the demonstrators fighting one another more than they fight their common foe: the government and those running it.
Administration officials say that what’s happening in Greece can’t happen here. They should consider the work of my friend Marc Nuttle.
Marc Nuttle is an attorney, author and consultant. He’s worked with businesses and political leaders in more than a dozen countries around the world.
And while the Obama administration is advocating an increase in the debt ceiling with no constraint on future spending, Marc Nuttle is talking instead about a debt wall — a wall our current economic policy assures we hit at full speed within 18 months or so.
Marc’s reasoning is this: Our current deficit is about $1.67 trillion. The deficits of the rest of the nations in the world run another $9 trillion or so. Combined, there simply is not enough liquid capital in the world to fund $10 trillion in deficits at an interest rate taxpayers anywhere can actually afford.
Once governments hit the Nuttle Debt Wall — and the world runs out of ready money to borrow — they’ll pursue other means. Financially strapped governments will raise interest rates to pull investors and their equity from other markets. They’ll also succumb to the irresistible temptation to turn up the presses and print more money, thereby debasing their currencies and creating huge pressure to inflate prices.
We’re seeing what happens under that scenario today in Greece, where the government pays as much as 23% to those who will take its debt. The U.S., by contrast, currently pays less than 1%.
But whether a given government pursues huge interest rate increases or a debased currency and high inflation — or the inevitable combination of both — the working middle class will get hit first as they see their savings erode, their businesses fail, their jobs vanish and their families hurt.
Come elections in the U.S. next year, the hard-hit middle class will not likely be attracted to a president under whose watch their pain was exacerbated.
Another outcome is equally inevitable. Eventually, as most of the governments in Europe have already learned, hitting the debt wall will force austerity programs on every department and agency of government — those you deem indispensable as well as those you may prefer be dispensed with.
That means Obama’s most enthusiastic followers — the left and those dependent on government services — will bolt from Obama’s camp in a heartbeat once they sense their entitlement programs are in jeopardy.
It’s in the context of such a political environment that the 2012 elections will be held.
Demagoguery won’t be good enough no matter the flavor, Republican or Democrat. Voters will demand leadership prepared to rise to the occasion.
Just when we’d thought all the great issues had been resolved by the giants of previous generations of Americans — independence and a new concept of government by our founders, the fight to end slavery by the generation of Lincoln, the defeat of Nazism by our grandparents, and the end of the Cold War by our parents, here comes an issue that could wreck the world’s economy and overturn our notion of government in service to man rather than the other way around.
How our nation and its political representatives deal with this crisis will define our age for generations to come.
If President Obama and others in Washington play politics with the issue and refuse to see the debt wall in front of us, they are destined to drive headlong into it. The demise of their political careers will be nothing compared to the wreckage they make of the lives of those they were entrusted to serve.
Tony Marsh is president of Marsh Copsey + Associates, Inc., a strategic communications and political consulting firm based in Washington, D.C. Mr. Marsh has served as a consultant to more than 300 successful candidate or issue campaigns in the United States and worked in more than a dozen countries worldwide.