Treasury Secretary Jacob Lew has said repeatedly that on October 17, the U. S. Treasury will be down to its last $30 billion. This spare change will be used to pay interest on the government’s debt. What if it is not enough to get through the day?
If $30 billion in interest payments will not get the government through the day, there is way too much government debt.
The Treasury has been cooking the books ever since May 17, when the U. S. government’s debt ceiling mysteriously hit $16.7 trillion and stopped growing. The fact that the Treasury is playing fast and loose with various federal retirement programs in order to keep this illusion going has bothered no one in Washington. The leaders in the Republican Party have remained mute. They should have been screaming “Fraud!” every day since May 18. But Lew’s “extraordinary measures” are universally accepted by everyone: politicians, Wall Street, the Justice Department, and the voters.
The corruption in Washington is so great today that the most obvious case of fraudulent accounting is ignored. What would have landed a man in the private sector in jail for securities fraud has not gained even a whisper of criticism in Congress.
The voters do not know how this is being done. They do not care. It’s all mere numbers for them. They assume that the laws of accounting do not apply to the source of the funding that the politicians have promised: pensions, health care, and safety nets for all. These are all free goods, as far as they are concerned. Nobody has to pay. It’s Tinker Bell economics.
The voters are upset that the illusion of free money is at risk. They are angry that debt — which they think must never be paid off — does not rise automatically. They dismiss Congress as a bunch of children for not automatically raising the debt ceiling above $16.7 trillion — the on-budget debt. The voters have never heard of the federal government’s unfunded liabilities — the off budget debt — the present value of which is over $200 trillion.
Voters are the children. They believe in fantasies. They want fantasies to come true. They are upset that there is some minor and temporary resistance to some of the government’s smaller fantasies. But the cooked books are indicative of the underlying reality. The fantasy has gone on without criticism ever since May 17.