At the national level, we read of numbers that tend to numb the minds of even the most public-spirited citizens: THE CONGRESSIONAL BUDGET OFFICE RECENTLY FORECAST THAT THE PATH CHARTED IN PRESIDENT OBAMA’S 2012 BUDGET WOULD REQUIRE THE FEDERAL GOVERNMENT TO BORROW $9.5 TRILLION OVER THE NEXT TEN YEARS. Federal government debt held by the public equaled 36% of the U.S. Gross Domestic Product in 2007, before the recession began, and 62% of GDP in 2010. BY 2021 (JUST TEN YEARS FROM NOW), ACCORDING TO THE CBO’S SCENARIO, IT WILL EQUAL 87% OF GDP, $20.8 TRILLION, A LEVEL MOST ECONOMISTS BELIEVE WOULD BE DEBILITATING, especially since the forces increasing federal deficits are likely to be even stronger in the third decade of this century than in the second. To cite just one problem, CBO PROJECTS INTEREST PAYMENTS ON THE NATIONAL DEBT WILL RISE FROM 1.7% OF GDP IN 2012 TO 3.9% IN 2021, BY WHICH TIME THEY WILL EXCEED $900 BILLION PER YEAR. That’s just the interest, as the President reminded us.
It will not be easy for Americans to be constitutionalists in theory and Progressives in practice if our elected government cannot pay its bills. If the lenders it depends on grow deeply skeptical about its ability to raise taxes or control spending, they will refuse to buy government bonds. (The manager of the world’s largest bond fund recently reduced the percentage of its holdings in U.S. government-issued debt to zero.) Less drastically, lenders will demand a costly interest premium to offset the risk of default by state and local governments, or of inflation sponsored by a federal government to reduce its debt by devaluing the currency. AT SOME POINT, THE QUESTION BECOMES, NOT WHETHER PEOPLE LIKE IT WHEN THE GOVERNMENT GIVES THINGS TO US AND DOES THINGS FOR US—AS THE PRESIDENT KNOWS, BOTH LOGIC AND EXPERIENCE DEMONSTRATE CONCLUSIVELY THAT WE DO—THE CRUCIAL QUESTION BECOMES WHETHER PEOPLE LIKE PROGRESSIVE GOVERNMENT’S ENDEAVORS ENOUGH TO PAY FOR THEM.
If we don’t, if it becomes democratically impossible either to raise the taxes necessary to fund the government’s operations, or to reduce the scope of its activities to a level that can be accommodated by the taxes the people are willing to pay, then THE PROGRESSIVE PROJECT COLLAPSES. The people will no longer mediate the disparity between what they demand from government and what they surrender to it. Instead, DECISIVE POWER OVER GOVERNANCE WILL PASS TO THE LENDERS WHO KEEP PUBLIC-SECTOR OPERATIONS AFLOAT.
Such a result would be a financial debacle…
The funny part here is the left who distrusts the private sector in general and the financial sector in particular is steering us on a course where they will be putting those people in charge.