Check out this chart:
This chart comes from today’s New York Times editorial section. I found myself mesmerized by it this morning. It makes painfully clear just how deluded our current debates about the deficit are.
Toward the top are many of the items pundits squabble about and hold up as ‘hotbutton issues’ in political debate. Eliminating congressional earmarks, cutting foreign aid and letting the Bush tax cuts expire are all ample fodder for chatter on Fox News and MNBC. If this chart is any indicator none of them really puts a dent in the deficit. Even cumulatively.
Mid-way down the y-axis we see some loftier measures which are election killers for anyone backing them. Cut war spending entirely. Stop the Recovery Act handouts. Double corporate income taxes. These make a bigger dent, but still aren’t a panacea.
It is not until you get down to the draconian measures no one in their right mind would consider – shutting down social security or eliminating Medicare benefits – that we get any real chunk whittled out of the deficit. In fact, the smallest half-dozen ‘hot button’ measures don’t add up to equal even the smallest of the four big, nasty measures.
This is our mess. Oh, but it gets worse, and here’s why.
It’s all symbols. Our entire financial system has made money symbolic – numbers on ATM statements and monthly reports. When you hand over cash, you feel yourself spend money. Cash provides a tactile sense of gain and loss that numbers on a paper slip anesthetize. I believe this abstraction of money and spending is partially responsible for the credit run up and subsequent crash. It’s easy to take on a 0% ARM and make interest-only payments assuming your homes value will only go up when there’s no discomfort involved in doing so. Easy that is until the bank comes to foreclose. Then as the anesthetic wears off, headlines begin talking about ‘pain’. Too little, too late.
Everybody Pays
A favorite novelist of mine, Andrew Vachss, wrote a collection of short stories titled Everybody Pays. It’s a great title. In two words it tells an immutable truth. Bills come due. Pay now or pay later but you will pay.
Yet we resist this reality. Worse, we enable this denial by masking the realities with symbols. Go out and ask someone what will happen if the United States just decides not to pay the federal deficit. What will be the specific outcomes? Most people have no clue. They’ve heard vague references to China or Saudi Arabia ‘owning’ the United States. Hard to believe that when you look around at your neighborhood. Hard enough anyhow, that the conversation remains abstract.
We hear the economy will collapse and the dollar will go the way of the Mexican Peso. Also hard to believe, especially in a country like ours where most transactions are in dollars anyhow. It’d be different perhaps if we exchanged dollars for yen and euros regularly but short of overseas travel, few of us do and let’s face it, for all it’s ups and downs, the dollar has been a consistent currency. You can still go to Canada or Mexico and their money feels less valuable to us.
De-Symbolize
If I were sitting in government I might put some minds to work on de-symbolizing our situation. At the top of that chart it stipulates that we could eliminate the deficit if we charged a one-time fee of $4100 to every citizen of the United States. For my family of four that’s $16,400. That’s a big chunk of change. Like purchasing insurance, my life would not improve one measurable bit if I forked over that money. Which may be precisely why it’s not a bad idea.
Writing that check to the government would sting. Especially in this economic climate it would sting badly. That’s the point. We’re in the midst of a years-long Orwellian groupthink dream. We spend borrowed money and continue to think we can put off paying it back. It’s absurd. Maybe we’ll inflate another economic bubble to block our view of this reality, but for my part, I think it would better if we all faced the music sooner than later and all together.
The one time a year we people become acutely aware of our federal budget is on 4/15 when we submit our tax returns. Whether we’re writing checks or getting one back, that’s when our symbolic money economy comes home to roost. If for one year, every citizen in America had to write a painfully large check* I think we might do a lot of longterm good getting our heads on straight about the reality of money and spending. We’d also see some serious scrutiny of our elected officials and I’m guessing greater voter participation moving forward if only to avoid making that painful check-writing session and annual event. Making every citizen cough up four grand would basically piss the public off and maybe then we’d cut through the nonsense and get something accomplished. Every elected official, from both parties, would suddenly be in the crosshairs because if they didn’t work it out and every American had to write an unreasonable check again a year later, you can bet we’d see a lot of the ballast-quality people in office shoved out the door. And if that didn’t happen, at the very least the deficit would be gone (for the moment).
Of course as you might imagine this idea probably won’t catapult me into office any time soon.
*I want to note here I am knowingly glossing over the havoc such a measure would cause among lower income households. It is admittedly unjust to have someone with an HHI of $35K paying the same as someone with an HHI of $3.5MM. My intention here is to make a point all the while knowing the details of the implementation are far more nuanced than I am presenting.
