Deconstructing the debt ceiling debate

Wow. Talk about alienating your base.

Did you see where the AARP disowned President Barack Obama, vowing to support his 2012 Republican challenger (whoever that may be), after the president called for bumping the Social Security and Medicare retirement ages to 70, then means testing both programs, cutting off benefits to anyone whose home equity and retirement savings together are worth more than $750,000?

Did you see how the Center for Biological Diversity, the Sierra Club and the Natural Resources Defense Council similarly ripped Mr. Obama a new one when he offered to close the Environmental Protection Agency, entirely? And how about the practically unprintable response of the National Education Association when the president offered, in exchange for sufficient GOP votes to raise the debt ceiling, to similarly shut down the 34-year-old federal Department of Education?

No? You didn't see any news coverages of those loud, angry defections from the president's Democratic base?

That's probably because none of those things has happened.

Yet since April multiple news reports have insisted President Obama offered the GOP "$4 trillion in spending cuts, including even cuts to Medicare and Social Security, daring to take on elements within his own party," if only the obstructionist Republicans would agree to raise the debt ceiling.

So why have we heard no loud squawking from the left, as envisioned above, in response to Mr. Obama's proposed cuts?

Because Mr. Obama actually proposed no specific cuts, of course. While the mainstream press plays along, pretending the recalcitrant party here is the Republicans who "refuse to accept" the president's incredibly generous offer, it turns out this "offer" is nothing but an oral promise that some distant future president and Congress -- long after Mr. Obama would be constitutionally required to quit the scene -- will make unspecified spending cuts, supposedly sufficient to protect the government's Moody's bond rating, in the years 2018 through 2023.

The federal government has set a new debt "ceiling" 11 times in the past decade. Each time, in effect, members of Congress promised the public, "We need to borrow some more money for a few real emergencies, but because you and your children will have to be taxed to pay interest as well as the principle, we promise we'll never seek to borrow more than this amount."

Eleven times they've hit the ceiling, and 11 times they've simply raised it again. Why? What unforeseen emergency came up? A nuclear war with China? California fell into the ocean? The glaciers have reached Cleveland and are still pushing south?

Pretend you're the guy at your local bank who's responsible for deciding who gets issued credit cards. A long-time troublesome customer comes on -- a guy who's never listened to your stodgy, old-fashioned advice about paying down his debts and buying things with cash -- and asks for a new credit card with a $100,000 limit.

"Wow. That's a pretty high limit for someone who doesn't maintain very high balances in your accounts. Why do you think you need that kind of card?" you ask.

"Because I've got 11 other cards with other banks that are all maxed out. If I don't get a new card by Aug. 2 so I can make the minimum payments on all those other cards, I'm going to default," he says.

Would you issue the card? Or would you tell that customer, "Sir, you don't just have a credit problem, you've got a spending problem"?

Both Congress and the president are the borrowers. Debt limits aren't negotiated by two borrowers talking among themselves; they're negotiated between the would-be borrower and a lender, who has some incentive to look into the likelihood that said borrowers have both the ability and the inclination to pay it all back with interest.

Until recently, that was primarily the Chinese. But the Chinese and other Asian investors have quietly pared back the amount they're willing to place at risk financing America's now-pointless wars and occupations of Iraq, Afghanistan and who knows how many other foreign mud holes -- not to mention all our unsustainable and actuarially bankrupt entitlement programs.

Thus CNBC reports the Federal Reserve bought approximately 80 percent of the U.S. Treasury securities issued in 2009.

When the U.S. government needs some money, it goes to the Federal Reserve and asks the banksters for some more green pieces of paper called Federal Reserve Notes. Normally, Uncle Sam would sell his Treasury bonds to outside investors. But as of 2009, there weren't enough outside suckers left.

When private operators do this kind of thing, I believe it's called fraud. When governments do it, no one goes to jail, but eventually something even worse happens.

The currency becomes worthless.

Vin Suprynowicz is assistant editorial page editor of the Review-Journal, and author of the novel "The Black Arrow" and "Send in the Waco Killers." See www.vinsuprynowicz.com.