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Culture War Roundup for the week of February 26, 2024

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Our treasured colleague Kulak is at it again with another post on his Substack.

I know that a slow-moving budget crisis is not the spiciest meatball, but the fiscal situation in the United States is looking bad. Debt to GDP is now above the previous high set at the peak of WWII. But whereas the post-wars years saw demographic and technological tailwinds, the current epoch is characterized by low fertility and productivity growth.

It gets worse:

The real crisis is the Unfunded liabilities, all the promises the US has made to Boomers (who dominate the vote) and others about money they’re GOING to spend.

As of now total Unfunded liabilities stand at 213 trillion dollars, $633,000 per US Citizen (Man woman, and newborn babe)… These are all dollars the US has promised to pay to someone somewhere at some point: Social Security, Medicare, Medicaid, Federal pensions, VA Benefits, etc. And cannot in any politically feasible way restructure or get out of.

While it might be possible to split a shrinking pie and remain friends, it is definitely IMPOSSIBLE to split a pie when more than 100% of the pie has already been promised to one person or another. Give a person a dollar, they are mildly happy. Take a dollar away and they are FURIOUS.

At this point, I'd encourage you to find a nearby senior citizen. Please explain to them that they don't deserve their social security check. You see, the money that was supposedly SAVED was in fact already SPENT. Far from saving money, their generation actually left a sizeable DEBT to future generations. So not only would seniors have to give up their government checks, they would have to pay hundreds of thousands of dollars in additional taxes just to get to even.

I'll wait.

Just how irrational are the expectations of our Boomer rulers? Slobodan Milošević understood.

Milosevich promised, and other politicians promised, their followers the old communists pensions would be honored and paid… And even at the height of the wars they won every election because of that base of aging pensioners…

The last politician to even contemplate reforming Social Security was George W. Bush, who claimed to have earned "political capital" shortly after his re-election in 2004. By March of 2006, his approval rating had fallen from the high 50s to just 31. Nowadays, politicians in either party don't even mention Social Security except to praise it effusively and promise to defend it at all costs.

We are well and truly fucked. The Federal government will be forced to default or inflate away its debts within the next 10-20 years. And this is BEFORE the numerous suggestions to somehow EXPAND the welfare state, whether they be student loan forgiveness, payments to favored racial groups, or universal basic income. After all, ours is a great laboratory of democracy. So while the Federal government enters a slow fiscal doom loop, some states like Illinois, California, and New York seem to be attempting a speed run.

How do we get out of this? Kulak has a few ideas, but I'm a little less dramatic.

  1. AI. Maybe we will somehow thread the needle between doom and nothingburger. 🤷

  2. Immigration. The U.S. could escape this problem by cherry picking the best citizens from other countries and telling everyone else to GTFO. We are still, after all, the best country (>10 million population subdivision). This would work, but it would never happen and it's probably a bad thing for the world at large.

  3. Inflation. Many liabilities are indexed to inflation such as Social Security and Medicare. But we could inflate away all the existing debt. Debt to GDP actually decreased in 2022 because of 9% inflation. That level of inflation for a decade or two could make the problem less bad. It would also be helpful if the official inflation numbers were even more fake.

  4. Things are just shittier in the future. Brazil is still a country. This is your future.

The problem with huge debts is not that you have to come up with the money. You can just borrow more to pay for whatever unfunded liability you have. The issue is the growing interest bill reduces your capacity to spend on things that people actually want, for any given level of taxation. The system doesn't collapse, you just have shitty roads, underfunded police, and high taxes.

The solution is simple, if difficult. Balance the budget. Hell, you don't even need to go that far, just get the rate of debt growth below the rate of economic growth. Keep it that way, and the problem becomes steadily more and more manageable over time.

As a digression, this is one of the differences in political culture between Australia and America that I think defies the standard view of Australia being more left wing. America seems to have just given up on even pretending they're going to ever address the problem. Australia doesn't always balance the budget but our governments, Liberal or Labor, are always under pressure to do so. We currently have a left wing government delivering tax cuts and budget surpluses. I'm not sure why the difference exists, but it's notable.

...Or just default on the debt. Lending to Uncle Sam in the current situation is irresponsible behaviour, after all - you wouldn't* lend to an alcoholic during a binge.

"wouldn't", surely, unless you're really black-pilled even by TheMotte standards.

Officially the debt clause may make default tricky. Unofficially hyperinflation is just as "good" and still an option.

an alcoholic during a binge.

For an extra-close metaphor, imagine you're planning to try to collect the debt from the alcoholic's kids.

Section 4 Public Debt

[...] But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States

Declare past US governments illegitimate.

That's a great way to finance an insurrection.