Monday, July 25, 2011

Apocalypse Now? Not With a Bang, but a Blunder?

t is increasingly possible that the catastrophic unraveling of the Industrial Age may begin in two weeks, not because of global warming or oil shortages or water wars or natural disaster, but because of a stupid political ploy by the Know-Nothings who are now ascendant in the US Congress. Instead of “starving the beast” — by which they mean disabling government by preventing it from raising revenue — they have discovered that they can kill the beast by preventing it from borrowing revenue. Gleefully, they are threatening to refuse to raise the technical limit on US debt, by which means they may throw the government into default on or about August 2.

Granted, the technical limit on US debt is a stupid law. It’s passage was just another way legislators pretend to do something without actually doing anything; it’s as if a club of fat people passed a resolution to go on a diet in two years — every two years. It’s dumb, but a hell of a lot easier than going on a diet.

However, the debt ceiling is not a resolution of a private club, it’s the law of the land, and as it stands, as of Tuesday, August 2, the federal government will not be authorized to borrow any more money. Thereafter, with the ceiling in place, not only will all current bills have to be paid out of the revenues that appear on that day, but bonds that come due will have to be paid in their entirety, instead of simply being rolled over into new ones.

On August 3, according to the Washington Post, the federal government expects to receive $12 billion in revenue, and must pay bills of $32 billion, including $23 billion in social security and disability payments alone. Another $10 billion in bills come due on August 4, offset by just $4 billion in revenue. And on that day, $100 billion in Treasury bonds are due to be retired. (more)