Debt Bomb

by Michael Ginsberg

  What the hell?

  Then she saw it.

  A picture of the Chernobyl sarcophagus. A collapsed nuclear reactor filled with concrete. The monument to mankind’s worst nuclear accident.

  Who names an investment group after a nuclear meltdown?

  This failed bond auction was no accident. It wasn’t the markets tired of loaning the United States endless gobs of money. Whoever was behind the Pripyat Consortium wanted to hurt the United States. And they’d discovered the country’s Achilles’ heel.

  Andrea had lost all focus after her call with Brooks Powell. Unable to relieve her tension, she decided to take a short walk around the White House complex. It turned into an hour-long hike up Connecticut Avenue to Dupont Circle and back, but it hadn’t helped a bit. As she sat back down at her desk, she was as frightened as when she’d left.

  This must be what a panic attack feels like.

  She had to call the president and tell him the federal government had no money to operate. A year ago, Andrea was calling clients about tax deductions they could take. Now this? Had any American had to make a worse call to the president? Maybe the Navy brass at Pearl Harbor? This call would be right up there.

  As she reached for the phone, she glanced at her Penn economics degree on the wall. Was there anyone she could call to salvage this situation before she’d have to call the president?

  She walked over to her bookshelf, grabbed her Penn yearbook, and flipped through the headshots of her graduating class. Under each photo was a name and the person’s major. Half these guys ran big Wall Street firms. Maybe they could save tomorrow’s bond auction and help her beat the boycott?

  It was a long shot. No fund manager or investment house chieftain was going to pour money into a bad bet out of warm patriotic feelings, and just because she had a Wharton business degree didn’t mean she had some secret Skull-and-Bones handshake that would get her classmates to buy bonds and save tomorrow’s bond auction. But it was better than having to tell the president the country was bankrupt. And if it worked, it would give the president some time to figure out a more permanent solution.

  Andrea hurried back to her desk with the yearbook and pulled out a small dispenser with red and green Post-it tabs from the top drawer. She put a red tab on each economics major she knew from Penn. Then she searched online to find where each one worked. She put a green tab next to anyone who worked in a major Wall Street brokerage house. The ten classmates who got green tabs were getting a call.

  After finishing her yearbook review, she leaned back in her chair, cracked open a Diet Pepsi, and took a swig. She’d been a Pepsi drinker since she won an “I Took the Pepsi Challenge” T-shirt at the Jewish-American Festival in Baltimore as a kid in the Seventies. She peeked into her recycling basket to be sure it had room for the several Diet Pepsi cans she expected to polish off while trying to recruit buyers for American bonds.

  Now it was time to start calling.

  All morning Andrea called one finance titan after another. None had any interest in buying American bonds. She’d appealed to their patriotism. She’d offered White House tours and pictures and dinner with the president, not knowing or caring if the offers were legal. After nine separate calls to nine different brokerage houses without getting a single commitment to buy bonds, Andrea was overcome with hopelessness.

  She’d saved Buck Oates for last. He was her best hope.

  William “Buck” Oates was one of her closest college classmates and a senior executive at Citicorp. They went back more than two decades. She’d helped him pass his sophomore macroeconomics class. If Andrea couldn’t convince him to help, she wouldn’t be able to convince anyone.

  “It’s good to hear from you. Been too long,” Buck said. “But I had a feeling you’d be calling this morning.”

  “You’ve heard then?”

  “It’s all over the financial press. Bloomberg is reporting that the ‘day of reckoning’ is upon us.”

  “And what do you think?”

  “I think I’m glad I bought those gold coins William Devane keeps pushing in those stupid late-night infomercials.”

  “Seriously?”

  “No, not entirely seriously. But I’m not kidding, I did buy the coins.”

  “We have another auction in seventeen hours. If the government can’t sell its bonds tomorrow, we’re well on our way to not being able to pay for daily government operations.”

  Buck laughed. “Oh, woe is me! Are you trying to convince me not to buy the bonds? Whatever will I do without daily government operations?” His voice dripped with contempt.

  “Come on, Buck. You don’t really mean that. What happened to the guy I knew back at Penn? The guy who was in the band and was the last one home from the Locust Walk parties? You might be a finance titan now, but you used to be a pretty soft and sensitive guy.”

  “Yeah, well, soft and sensitive and a five-dollar bill will get you a grande latte at Starbucks on Wall Street. This is a tough business, Andrea, and I didn’t get to where I am by taking pity on bond brokers and investing in their shitty bonds.”

  Andrea bristled at Buck’s lack of sympathy in her moment of crisis but couldn’t bring herself to beg for his help. “You know perfectly well even a Master of the Universe like you needs the government for something. Unless you don’t mind pothole-filled rides to the Hamptons on the LIE or an uncontrolled free-for-all in the skies without any air traffic control, in which case tomorrow may be your lucky day. But not having air traffic control might make those helicopter trips to Southampton a little less safe than usual.”

  “I doubt things are that bad, Andrea.”

  Andrea reached for a sports analogy she thought would appeal to Buck. “Don’t be so sure. It’s like the Giants, right? Last year their offensive line was Swiss cheese. So they went out and bought a bunch of new O-linemen so the quarterback wasn’t knocked on his tuchus every other play. We need to get our biggest financiers together, convince them of the urgency of the situation, and have them ensure that our bond auctions this week succeed. Otherwise, America will be knocked on her rear end in a way I can’t begin to contemplate.”

  “Andrea, I’m a part-owner of the Giants. I could do something about the Giants’ offensive line. I didn’t run up forty trillion dollars in debt. I may be a well-connected financier, but I haven’t the first clue how to convince someone that anyone is good for forty trillion dollars. I wouldn’t buy debt from anyone forty trillion in the hole. I know a Ponzi scheme when I see one.”

  Andrea desperately appealed to Buck’s liberal political sensibilities. “Buck, in twenty-four hours this country is going to have to stop funding Medicare and Social Security. Do you know what that means?”

  “A lot of old people are going to die and I won’t have to pay for their healthcare.”

  Andrea couldn’t believe her ears. “Jesus, Buck, what the hell happened to you? You’re a Democrat! You’re not supposed to talk like that. In twenty-four hours, ‘eat the rich’ is going to go from a slogan to an operating principle. You think when most of the country’s law enforcement officers lose their jobs and medical benefits, you and your four houses are going to be safe? Think again.”

  As she spoke, she realized she was articulating for herself the consequences she foresaw. She knew what budget cuts were coming.

  “Listen, Andrea, we go back a long way, so I’m going to tell you this as gently as I can,” Buck said, anger dripping from his voice. “Believe me, if we weren’t friends in college, this conversation would already be over. Here’s the deal: I’m not going to use my investors’ money to prop the United States government up for a few more days. I can’t do that no matter what the situation is. My obligation is to my clients. The money I invest is theirs, not mine. I can’t be playing hero with their money no matter how much I might want to help.”

  “Fine, Buck.” Andrea could see she was wasting her time. “We’ll remember this the next time Wall Street needs a bailout.”

  Andrea sl
ammed the receiver down in frustration.

  Ten calls to Wall Street brokerage houses hadn’t gotten her a single commitment to help salvage the next day’s bond auction. Buck Oates had been her best shot. The jig was up. She would have to tell the president.

  “Andrea, what’s going on?” President Murray said, sounding annoyed at the interruption.

  “Mr. President, we have a problem,” Andrea replied, her voice slightly catching.

  President Murray paused.

  Andrea swallowed. She should have started with some small talk, but it was too late now.

  “I expect to get ‘we have a problem’ from SECDEF or the Secretary of State or a whip on the Hill telling me I’ve lost the votes on a bill,” Murray said. “I’m not supposed to get it from the OMB director.”

  “Trust me, I wouldn’t say it if I didn’t mean it.” Andrea couldn’t lie or sugarcoat. Not because she was morally opposed to lying. She just couldn’t pull it off.

  “Well, what is it? A month in and you already have a problem at OMB? What could possibly have happened? Did a shipment of green visors get lost in the mail?”

  Andrea didn’t laugh. “Accountants don’t really use green eyeshades anymore.”

  “All right, cut to the chase. What’s going on?”

  “Mr. President, a bond auction failed.”

  Silence.

  “Mr. President, investors won’t continue to lend us money to operate the government.”

  More silence.

  “Mr. President, what this means is—”

  “I damned well know what this means,” President Murray growled. “Is there any way to salvage tomorrow’s auction?”

  “I tried, Mr. President,” Andrea replied. “I called every finance titan I knew. They all told me the same thing. They didn’t want the bonds today, they don’t want them tomorrow. Not unless we can figure out a way to guarantee they will get paid back. And with a forty-trillion-dollar debt, they didn’t believe any guarantee I tried to give them.”

  Silence.

  “Mr. President?”

  “I’m thinking.”

  More silence.

  “Sir?”

  “I think you know what this means, Andrea.”

  “Are you sure?”

  “Get yourself over to the Oval. Bring the Nuke. I’ll call Wally.”

  Then Andrea heard a dial tone. She leaned back in her chair, staring silently at the wood-carved OMB logo on her wall. Maybe I could sell it and use the proceeds to buy a bond, she thought ruefully.

  Her eyes began to moisten as she stared at the Calvin Coolidge painting that hung next to the bookcase. Coolidge had always been one of Andrea’s heroes. Her Republican friends loved the old standbys: George Washington. Abraham Lincoln. Ronald Reagan. The quirkier ones might admire Teddy Roosevelt or Dwight Eisenhower. But for Andrea, true to her accountant roots, Coolidge was king. Coolidge had met with his budget director, his Andrea equivalent, every day to review the budget. No budget crises for Calvin Coolidge.

  When she learned she could get a painting from the White House’s archives to decorate her office, she’d asked for a portrait of Coolidge. The archives had no trouble providing one. Coolidge portraits weren’t in demand.

  “What would you do, Mr. Coolidge?” she said under her breath. How absurd it was to think it might have some wisdom to convey.

  But the portrait was as silent as its subject.

  Andrea looked out her office window onto the Ellipse. The noontime sun illuminated interns and Hill staffers playing softball and Frisbee, tourists looking at the South Portico of the White House, and joggers on the Mall out for their daily runs. All seemingly blissfully unaware of the unfolding debt crisis.

  Andrea willed herself from her chair and walked over to the Coolidge portrait. She looked at Coolidge’s bland visage and wanted to apologize to him. Instead, she gently took the portrait off its hook and turned it over.

  Taped to the back was a small key. Andrea removed the key, opened a drawer of a file cabinet in the far corner of her office, and pulled out a binder. She’d put the Nuke in the drawer when she’d moved in, hoping she would never see it again. Fearing leaks, she hadn’t made paper copies or even saved an electronic copy on the White House computer system. It was bad enough having this document. She wouldn’t survive its leaking.

  She took a Kleenex from her desk and swabbed the sweat from her forehead and neck. She wiped her glasses clean of the sweat that had dripped onto them. Then she took two deep breaths, composed herself, and crossed West Executive Avenue, the Nuke in hand, to meet the president.

  When she arrived at the Oval Office, President Murray was seated behind the Resolute desk. Wally Flynn was sitting across from him in one of the two armchairs, hunched over, elbows on his knees, sleeves rolled up, the lanyard with his White House pass dangling from his neck. They stared at Andrea when she entered.

  Great, Wally Flynn. My good buddy. Mr. Reelect-the-President-at-All-Costs.

  Andrea took a seat in the armchair beside Wally.

  “Wall Street told me to pound sand,” Andrea said.

  “Greedy sons of bitches,” Wally muttered.

  “Would you loan money to someone forty trillion dollars in debt? I think that’s what they refer to as a ‘bad credit risk,’” she said.

  Andrea’s heart was racing again. Knowing the country had only one option was one thing. Telling the president was another. Her back tingled with sweat.

  “Our only option is to use the emergency budget. The Nuke, sir.” She held up the binder.

  “What the hell is the Nuke?” Wally asked.

  The president solemnly nodded, wordlessly giving Andrea the green light to bring Wally in on the secret.

  “It’s a budget that cuts what needs cutting to bring down the debt immediately,” Andrea said. “Either we do the cuts on our terms or foreign lenders will do them for us. If we don’t show some seriousness in cutting our budget now, foreign bond buyers will kiss us goodbye and we won’t have any money anyway. We do it or they do it. Either way, it’s getting done.”

  Andrea twiddled her fingers nervously. What if Wally got the president to say no? None of the other budgets she’d put together during the campaign cut the budget quickly enough to respond to the bond boycott. It was the Nuke or bust.

  “Let me take another look at the Nuke.” The president sat up in his luxurious leather chair. Andrea handed him the binder with the Nuke inside.

  “You have a copy for me?” Wally asked.

  “There are no copies,” said Andrea. “Didn’t want this to leak. Still don’t.”

  Wally smiled. Andrea figured a wily Washington veteran like Wally would appreciate her paranoia about leaks. He got up from his seat and walked behind the desk to look at the Nuke over the president’s shoulder.

  “Other than what’s written here, everything the American government spends disappears?” the president asked.

  “That’s how I drafted it,” she confirmed.

  Wally’s eyes progressively widened as he scanned the Nuke. By the time he reached the bottom, his mouth was agape.

  “My Lord, are you mad? You cut everything!”

  “That’s not true, Wally,” said Andrea. “This is still a three-and-a-half-trillion-dollar budget.”

  “But half of it is going to pay down debt and pay interest on the rest of the debt,” Wally exclaimed.

  “What do you want me to do?” Andrea gritted her teeth. “That’s what happens when you run up forty trillion dollars in debt. The payments go up.”

  “There is no way on this earth we’ll get the emergency budget through Congress,” said Wally. “They will eat us alive.”

  “Congress?” Andrea asked. “That’s the least of our worries. This budget is going to kill people.”

  President Murray stood and wandered toward the fireplace on the opposite side of the Oval, seemingly lost in thought.

  “Mr. President, we cannot make these cuts,” Wally shouted. “We’re co
mpletely cutting science, medical research, education? Pell Grants and student loans? Highway construction? The military budget? Have you lost your mind? Voters are going to kill us.”

  The president was slowly ambling around the Oval Office, looking at its paintings and sculptures, memorials to American power and strength, seemingly oblivious to Wally’s caterwauling. He stopped at the bust of Lincoln on a small table to the left of the fireplace and rubbed it.

  “Unbelievable,” President Murray said. “Whenever there’s a natural disaster or tragedy in the world, who’s the first there?”

  “Americans,” said Wally.

  “Exactly,” the president said. “We transport supplies to earthquake survivors. We send doctors to Africa to treat Ebola patients. We send the FBI to help investigate foreign terrorist attacks and the NTSB to investigate plane crashes. No one has the logistical and technical capability to save human lives like the United States.”

  Andrea undid her ponytail and ran her hands through her hair. “Are you willing to tell a retiree she can’t get her medicines because we’re spending on earthquake relief in South Asia instead? Because that’s the choice we face.”

  Wally continued reviewing the cuts. “The federal workforce? Contractors? You’re slashing all that?” he exclaimed. “We’ll lose Virginia for the Republicans for a generation!”

  “I’m the OMB director,” Andrea said, “not the chairman of the Republican National Committee.”

  “Laying off federal employees will be a shitstorm of the first order,” said Wally. “We’ll plunge the DC economy into a depression.”

  “You’re not going to get any sympathy outside of Washington on that,” Andrea snapped. “A lot of my small business clients in South Carolina went through some very lean times during the Great Recession. I saw it. I did their taxes. They know damn well Washington is the wealthiest region in the country. And this town doesn’t make a thing.”

  President Murray returned to the Resolute desk where Andrea and Wally were facing off. “We can talk all we want about this small stuff, but it’s a pimple on a gnat’s ass. The real money is in entitlements. Medicare, Medicaid, Social Security. You all know it.”