Mark Steyn on US debt

Mark Steyn's latest column for National Review Online hits one out of the park.

The markets are apparently concerned that the entire global economy may be “stalling.” You don’t say? Observant fellows, these market chappies.

And yet, in a certain sense, these are still the good times. At the end of the week, U.S. Treasury yields plunged to Eisenhower-era rates. America, explained Ethan Harris of Bank of America Merrill Lynch, “still gets the safe haven money.” That’s to say, as crazy as Washington is, Europe is perceived to be crazier. In confirmation of the point, over in Italy, which is (believe it or not) a G7 economy, police raided Moody’s and Standard & Poor’s over allegations that all the meanie things that the rating agencies have been saying about the Italian economy were having an impact on Italian stock prices. Apparently that’s a crime in Italy. They’re not yet shooting the messenger. But they are dragging him through the streets in chains pour encourager les autres. Good luck with that.

But I wonder if “the safe haven money” is quite as safe as its investors assume. Under the “historic” “resolution” of the debt crisis (and don’t those very words “debt crisis” already feel so last week?), America will be cutting federal spending by $900 billion over ten years. “Cutting federal spending by $900 billion over ten years” is Washington-speak for increasing federal spending by $7 trillion over ten years. And, as they’d originally planned to increase it by eight trillion, that counts as a cut. If they’d planned to increase it by $20 trillion and then settled for merely $15 trillion, they could have saved five trillion. See how easy this is?

As part of this historic “cut,” we’ve now raised the “debt ceiling” — or, more accurately, lowered the debt abyss. Do you ever discuss the debt with your neighbor? Do you think he has any serious intention to repay the 15 trillion racked up in his and your name? Does your congressman? Does your senator? Look into their eyes. You can see the answer. And, if none of these parties seem inclined to pay down the debt now, what are the chances they’ll feel like doing so by 2020 when, under these historic “cuts,” it’s up to 23-25 trillion?

. . .

The fecklessness of Washington is an existential threat not only to the solvency of the republic but to the entire global order. If Ireland goes under, it’s lights out on Galway Bay. When America goes under, it drags the rest of the developed world down with it. When I go around the country saying stuff like this, a lot of folks agree. Somewhere or other, they’ve a vague memory of having seen a newspaper story accompanied by a Congressional Budget Office graph with the line disappearing off the top of the page and running up the wall and into the rafters circa mid-century. So they usually say, “Well, fortunately I won’t live to see it.” And I always reply that, unless you’re a centenarian with priority boarding for the ObamaCare death panel, you will live to see it. Forget about mid-century. We’ve got until mid-decade to turn this thing around.

Otherwise, by 2020 just the interest payments on the debt will be larger than the U.S. military budget. That’s not paying down the debt, but merely staying current on the servicing — like when you get your MasterCard statement and you can’t afford to pay off any of what you borrowed but you can just about cover the monthly interest charge. Except in this case the interest charge for U.S. taxpayers will be greater than the military budgets of China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel combined.

There's more at the link. Go read. The man speaks truth.

Peter