The United States is on a silent countdown speeding toward financial oblivion. Since January, Congress and the Biden Administration have been aware that this summer would be a critical vote for the debt ceiling. Failure to raise the debt ceiling will result in major economic damage to the United States, the likes of which may take a generation (or never) to recover from.
In fact, given all the other economic and financial woes the country has found itself in since the novel coronavirus erupted from Wuhan, China, three years ago, Congress failing to raise the debt ceiling might just be the final act the United States as the world’s sole remaining superpower.
Already the world, as led by the new Chinese superpower, is moving away from the US dollar. This is partly because of the growing aversion to relying on the dollar as a reserve currency when it is clearly going to be weaponized by Washington at any point against anyone the United States dislikes.
The move away from the dollar is being orchestrated by China to weaken the United States’ dominant position in the world system (which has traditionally been built upon America’s dynamic economy). Other nations are looking to China’s example because they rightly fear that the American government is about to obliterate their own currency and economy with this ridiculous debt ceiling fight.
The Americans, meanwhile, remain blissfully ignorant.
The world is disentangling from the US dollar out of fear of America’s horrific economic state and the elected leaders of the United States are too busy posturing against and bickering with one another on the most absurd topics imaginable. Neither the Democratic nor Republican Parties are inclined to come to an agreement designed to raise the debt ceiling so that the country can avoid entering another major recession (or something scarier).
Burning Down the Fiscal House
In a recent 60 Minutes interview, Rep. Marjorie Taylor-Greene (R-GA) insisted that her wing of the House GOP would not brook any compromise on their calls to cut federal spending. Meanwhile, the Biden Administration refuses to negotiate with Speaker of the House Kevin McCarthy (R-CA) until, as Senate Majority Leader Chuck Schumer (D-NY) insists, McCarthy “shows [the Democrats] his plan” to raise the debt ceiling.
As this completely avoidable crisis painfully unfolds before our very eyes, a group of centrist Democrats and Republicans have defied their respective party leadership and started work on a compromise proposal that would allow for the debt ceiling to be raised. Much to the consternation of one unnamed member of this coalition of moderate Democratic Party lawmakers, “You’ve got party leaders in both houses who don’t want [moderate Democrats and Republicans] to talk to each other.”
Both sides sense there is an opportunity to strike the other going into the contentious 2024 Presidential Election cycle. What the two political parties don’t understand—or likely care about—is the harm their ideological brinkmanship is doing (or will do soon) to ordinary Americans, the very people they are to be representing and protecting.
While the jacka** and the pachyderm circle each other to maximize their leverage for the election, should they fail to raise the debt ceiling, the entire economy (which is already a house of cards under President Joe Biden’s reign of incompetence) will implode.
The value of the dollar will plummet. Already sky-high interest rates will soar. American pensioners will lose out bigly, too. Just when things couldn’t get any worse here in the United States, at that point, the Chinese will lead the world in moving on from the “unstable” US dollar.
America’s superpowerdom will be destroyed by the hands of its so-called leaders, who were so busy fighting each other they couldn’t see the larger picture. What’s needed is not more jockeying.
Enough of the preening moralizing from two morally bankrupt political parties already! It is time for real leadership to step forward on this matter, sit down at a big, beautiful table, and negotiate a settlement to this standoff that could honestly break the back of American power abroad and stability at home.
“The amount of debt your country carries is a terrible vulnerability,” was the message that then-Chinese Finance Minister delivered to George W. Bush’s Secretary of Treasury Hank Paulson at the height of the 2008 Great Recession. What did the US government do in response to that comment? It piled on more debt to its ongoing tab!
Reason Has Fled Them All
There was a chance to address the looming American debt crisis in 2010. At that time, Congress had empaneled a commission of Democrats and Republicans, as led by former Republican Wyoming Senator Alan Simpson, and the onetime chief of staff to former President Bill Clinton, Erskine Bowles.
The National Commission on Fiscal Responsibility and Reform crafted a textbook example of healthy compromise—of the kind that the Framers of the United States Constitution envisioned when they met to create America’s founding document in 1789—that would have cut $4 trillion in deficit spending. The plan would have gotten the country’s dangerous debt-to-GDP ratio down to around 60 percent by 2023 and a more manageable 40 percent by 2025.
The Simpson-Bowles plan addressed the biggest contributors to America’s debts, such as Social Security, Medicaid, and Medicare and would have reined in excessive government spending in the defense sector without compromising the US military’s all-important readiness. What’s more, the plan gave both political parties what they wanted: Republicans got steep spending cuts and Democrats got tax increases.
Had the commission been taken seriously by both parties as opposed to being treated as a sideshow, beginning around 2015, the economy would have seen long-term relief. If the Simpson-Bowles Plan been enacted when its creators wanted it to be, the country would be on the glide slope to a soft fiscal landing.
Sadly, not even the members of the commission could get behind their plan. Sensing the political toxicity at the time, likely feeling pressure from their respective party leadership to seek maximum gains from their political rivals, only 11 of the 14 members of the Simpson-Bowles Commission voted in favor of the plan. For the commission to have its plan officially considered by Congress, all 14 members had to vote for it.
Although, once in Congress it is unlikely that the plan would have passed. That’s because the maximalists on both the Left and Right refuse to talk to each other or even consider the other’s viewpoints. Everything is subordinated to the two-and-four-year electoral cycle; reduced to a thoughtless 180-characters-or-less mentality, meaning things like compromise and negotiation are unthinkable.
America’s present situation is bleaker than it was in 2010, when we still had a cushion for a soft landing if we made the changes that Simpson-Bowles demanded. Instead, we get the agony and the ecstasy of Rep. Marjorie Taylor-Greene (R-GA) and Rep. Alexandria Ocasio-Cortez (D-NY) playing out their own high school psychodrama in which the fate of America lies in their well-manicured hands. There is no probity, wisdom, or even empathy for each other among America’s political class. Thus, a deal is unlikely before disaster hits.
America’s Politicians Pave the Way for China’s Rise
That’s why China is leading a global economic revolution against the US dollar. It’s why the two political parties are happily driving themselves—and the country—off the cliff, all while remaining convinced that their side will prevail and gain greater power because of the pending collapse.
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An economic collapse will benefit no one. Like nuclear war, it will only destroy. Let us pray that there are still some reasonable people left in Washington, D.C., who recognize the need to negotiate; to live-to-fight-another-day.
A 19FortyFive Senior Editor, Brandon J. Weichert is a former Congressional staffer and geopolitical analyst who is a contributor at The Washington Times, as well as at American Greatness and the Asia Times. He is the author of Winning Space: How America Remains a Superpower (Republic Book Publishers), Biohacked: China’s Race to Control Life (May 16), and The Shadow War: Iran’s Quest for Supremacy (July 23). Weichert can be followed via Twitter @WeTheBrandon.
