Suppose this guy, let’s call him Sam, has always been a bit overweight, about 5 pounds. After the 911 attacks, he felt so distraught he stopped going to the gym and started gaining an extra pound every two years. By 2008, when Lehman Brothers went under taking Sam’s pension with it, he was already 10 pounds overweight. He became so worried about the future that he would stay awake all night eating snacks. By then, he was gaining 2 pounds per year. “Enough!”, Sam said, when the scale indicated that he had amassed an extra 14 pounds, “I am starting a diet”. Sam calculated that if he did not exercise and continued over-eating, in another ten years he would be 25 pounds overweight. He devised a fabulous diet by which, instead of gaining an extra 11 pounds, he would gain only 9. That, in essence, is what our federal authorities agreed to yesterday.
Federal expenditures are not decreasing; they will increase $9 trillion above the level of revenues, instead of $11 trillion. Expenditures will increase compared to last year. And yet, The New York Times editorialized today: “It is … bad policy in its goals of cutting spending too much”. Perhaps, after the crash, they will apologize for spreading the news of non-existing spending cuts as they did for non-existent weapons of mass destruction. But there is more to this story.
Sam took his wife out to dinner and they agreed that after he ate a second serving of that 900 calorie cherry cheese cake, he would compensate by eating a pea less one month, a spoonful less of soup the month after, until he reached a total of 900 calories in the course of the next 10 years. Furthermore, he would not start diminishing his overeating by a pea until 2016.
After consuming his second slice of cherry cheese cake, Sam and his wife also agreed that if he ordered an extra 2,100 calorie bacon cheeseburger and French fries to take, he would further cut down his caloric consumption of vegetables by the same amount starting in 2018. This way, he would reach his goal of gaining only another 9 pounds, instead of 11, by 2021. Yesterday’s deficit reduction plan will reduce the federal debt by as much as Sam will lose weight.
Another interesting aspect of Sam’s diet is that he is substituting his increase of fatty and sugary foods now for a decrease in vegetable consumption later. In this sense, Americans are right to be outraged even by the possibility of basic social services being eventually cut. However, the New York Times, Democrats, Paul Ryan, and Obama are not calling for a drastic reduction of the equivalent of Sam’s indulgence at dinner, which would be the Pentagon’s $700 billion budget for next year. The real debate is between preserving American military supremacy through debt or by cutting social services. The challenge is to conduct this debate without the media, Democrats, or Republicans ever mentioning the current policy of remaining the dominant superpower and retaining the necessary military capability to fight two major wars simultaneously.
Another taboo revealed by the deficit drama is the demographic transition. The CBO’s delusional budget projections are based on continued natural population growth contrary to what the Census Bureau projects. Furthermore, they project high levels of immigration, again, reversing a trend in which half a million foreign workers have been leaving every year since 2008. And not only that, the levels of immigration required to achieve the GDP growth they project are so outrageously high that they would require Mexico to actually start depopulating.
There were no WMD. There were no triple A mortgage securities. And the empire will not be sustained by the labor of immigrant ghosts, cuts in social services, or non-ending debt.
The empire is crumbling.