Playing Let’s Pretend

One definition of intellectual dishonesty is the practice of ignoring reality when it interferes with what you want to believe about the way the world works.  The bipartisan deal President Biden signed on June 3, after months of political brinkmanship to raise the debt limit for two years and increase the amount of money the federal government can borrow, is an example.

Cynics might be forgiven for insisting there is a great deal to be said for intellectual dishonesty in American society.  They would remind us that the body politic is much more likely to enjoy an adequate supply of the public goods and services that are so vital to the national welfare if Americans can convince themselves that “someone else” is paying for them.

Whenever we admit to ourselves that the cost is coming out of our pockets, we inevitably try to cut corners or do things on the cheap, and ultimately deprive ourselves of much that is really needed.

Many Americans would argue that government has played a major role in this national con game since the early days of the republic.  By cleverly manipulating things like tax rates, deductions, and public accounting practices, the government has made it easy for Americans to persuade themselves that “the other guy” is paying most of the bill for the things we need.  All of which has helped make the United States great—in the sense of becoming the world’s most ostensibly successful national economy for the moment.

The national debt has soared, nearly tripling since 2009, forcing the U.S. Treasury Department to borrow more to pay for government spending.  The legislative curb on this borrowing is known as the debt ceiling.  When Treasury spends the maximum amount authorized under the ceiling, Congress must vote to suspend or raise the limit on borrowing.

The latest deal includes caps on federal spending, additional work requirements for food stamps and welfare, and reforms to build energy projects more quickly.  But the caps would not actually reduce spending.  The end game is to make it grow more slowly, say more slowly than the rate of inflation.

Divided government is never pretty.  But if you are of a Panglossian persuasion, you will rejoice that this deal enables both sides to claim a win of sorts.

Neither wants to be responsible for a catastrophe, so each pretends it is a win-win deal. Republicans can say they cut spending since spending will grow more slowly than it might have otherwise. Democrats can argue that they prevented actual cuts.  In theory, everyone wins and politicians insist they conducted themselves in an intellectually honest fashion.

But the American public, not elected officials and government bureaucrats, is to blame for this.  They insist on receiving more from government than they’re willing to pay for, and they don’t ask any serious questions about the charades and fiscal shenanigans necessary to sustain the illusion of a free lunch.

The U.S. is up to its neck in debt – $31.4 trillion as of January 2023.  Since it cannot increase its income in the short term, it needs to exchange new debt for old debt, leaving no choice but to raise the debt ceiling to avoid global economic chaos.  The annual federal deficit has averaged nearly $1 trillion since 2001, meaning government spends that much more money than it receives in taxes and other revenue.

To make up the difference, the government has to borrow to finance payments that Congress has already authorized. Even with the debt limit raised, the best way to repay the debt is to figure out how to revive the economy.

Good government types and fiscal moralists may be outraged by these shell games and urge Americans to stop acting like children.  But Americans have a long and pragmatic tradition of believing that fiscal morality, like religion and the law, is great as long as it doesn’t get in the way of anything really important.

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