Republicans and Democrats Team Up to Saddle Americans with More Debt
Bullion.Directory precious metals analysis 22 January, 2024
By Clint Siegner
Director of Money Metals Exchange
This makes the most recent betrayal by the Republicans in the House of Representatives relevant to our readers.
Last week, the newly installed House Speaker – Mike Johnson – cut a deal with Democrats to pass yet another continuing resolution and keep deficit spending at a level only briefly surpassed during the height of the COVID panic.
This year’s deficit is expected to be about $2.5 trillion – something unimaginable just a decade ago. The 2014 deficit was unprecedented at $485 billion, about 1/5 of the current level. Given the recent trajectory, next year’s deficit could be more than $3 trillion.
If the deficits continue expanding unabated, confidence in the U.S. dollar could crater, triggering very high inflation.
Hard choices need to be made in order to avoid such a calamity. Yet the politicians in charge can’t even make simple sacrifices.
Representative Chip Roy was one of the 106 Republicans who voted against the resolution to spend the mountain of money that our government doesn’t have. He laid the situation out perfectly on the House floor prior to the vote.
But at the end of the day, 107 House Republicans collaborated with 207 Democrats to dodge even a minuscule 1% cut in spending.
The hypocritical Republicans likely mouthed some commitment to fiscal responsibility and limited government to voters during their last campaign. Voters now know what those commitments are worth.
To be fair, the hard choices that have to be made in order to balance the budget are only possible in theory.
There is no politically viable means for politicians to stop the metastasizing federal debt. That ship sailed long ago. And a ship that massive is nearly impossible to turn.
Most federal spending is all but untouchable. Social Security, Medicare, Medicaid, and interest payments on Treasury debt combined for nearly 60% of all spending in 2023. Defense accounted for another 13%. Given the almost sacred nature of these programs, few politicians dare propose any significant cuts.
The politicians are fiddling as Rome is so obviously burning.
A federal default in some form is inevitable. The political hacks who want to pretend our government is incapable of default because the Fed can always print the money needed to meet obligations should start telling the truth.
They know there isn’t any meaningful difference between a debtor that fails to repay versus one who repays in devalued money.
In other words, there are two ways for our insolvent federal government to screw lenders.
The second way, a default through inflation, is more dishonest and less direct than an outright default. No doubt that is why American politicians and central bankers have already embraced this method.
The lack of principled leadership in Washington, D.C. is what put us on the one-way road to national insolvency. And absent principled leadership that reinstitutes limited government, the outlook for the Federal Reserve note “dollar” looks grim.
Clint Siegner
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named “Best in the USA” by an independent global ratings group.
A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.
This article was originally published here
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