Debt Bomb

by Michael Ginsberg

  “There is no way on this earth I’m going to let you cut Social Security and Medicare.” Wally banged his fist on the desk. “It’s political suicide. Remember those ads the Democrats ran with Republicans pushing granny off a cliff in a wheelchair? That’ll be you. Except this time, it’ll be true.”

  “Strictly speaking, it’s the international investors who won’t lend the United States any money that are cutting Social Security and Medicare, not the president,” Andrea said, rushing to President Murray’s defense. “We can’t make people lend the United States money, and we can’t spend money we don’t have.”

  “Strictly speaking, I’m sure the voters in Sheboygan won’t give a shit about the international investors,” Wally replied in a mocking tone. “They’ll blame me, you, and every other member of this administration when Grandma doesn’t get her insulin.”

  Just then, the phone on the desk buzzed. President Murray pressed the lighted button on the phone.

  “There’s a Treasury aide here to speak to you, sir.”

  “Send him in.”

  The thick door to the Oval Office opened. From behind it emerged an obviously terrified aide who couldn’t have been more than thirty.

  Bad news, thought Andrea. If this were good news, Brooks Powell would have brought it himself.

  “What’s the word from Treasury?” the president asked.

  “Two things, sir. The major bond rating agencies have lowered the rating on American government bonds to junk. And the major industrialized nations—China, Britain, France, Japan, Germany—plan to dump the dollar as the reserve currency.”

  “English, son,” said Wally. “What does that mean for us?”

  “We won’t be able to print money and inflate our way out of debt,” Andrea said, doing her best to translate. “These countries know we’ve literally papered over our budget problems, printing trillions of dollars in new money backed by nothing but the full faith and credit of the United States. Which the bond rating agencies now consider junk. We’ll have to pay astronomical interest rates to sell bonds.”

  “The United States is on the hook for forty trillion dollars, and someone else will decide the value of the dollars that will pay all that back,” Murray added. The wrinkles between the president’s eyebrows revealed just how stressed he felt.

  The president turned to the aide. “Thanks, son. Appreciate it. Tell Brooks I say hi.”

  The aide nervously shuffled out of the Oval Office and closed the thick door behind him.

  “Dammit, Earl, your presidency is on the line here,” said Wally. “I told you not to bring in this neophyte who never spent a day in Washington.” He spoke as if Andrea hadn’t been standing there. “Even if we somehow manage to get this through Congress, you might as well forget reelection.”

  Andrea clenched her fists and heard her knuckles crack. She might not have had experience in Washington, but she had more than enough experience with ruinous debt.

  “You’re no better than the rest of the Debt Rebel Gang,” Andrea fired back. “You can’t think past the next election.”

  A tense silence filled the office. They’d all used up their respective arguments.

  “Mr. President, are you going to make a decision?” asked Wally.

  Finally, Murray revealed his thoughts. “All right, I’ve heard enough. You’re both right. These cuts are political suicide. But we can’t wave a magic wand, put money in the Treasury, and give it to the agencies to spend.”

  Wally sat down on the sofa. His plump cheeks were flushed and his bald head was red from arguing.

  “Mr. President, we’ve been together in politics for twenty-five years. I knew you were going places the minute you gave your first speech on the floor of the House. I took a pay cut and demotion to come work for you. I’ve never regretted that decision. But you’ve just reached the pinnacle of American politics and you’re about to annihilate your presidency.”

  Andrea seated herself on the couch across from Wally. He had his elbows on his knees and was leaning forward, resting his chin on his folded hands. President Murray sat next to Wally on the couch. Andrea looked at them and gave a last plea.

  “Mr. President, you need to understand how serious this fiscal crisis is. If we don’t implement this emergency budget now, we won’t be able to borrow a dime and the government will come to a screeching halt. What do you think your reelection chances will look like if that happens? If you ask me, your only chance to get reelected is to pass the Nuke.”

  President Murray nodded forlornly. “I don’t see any other way,” he said. “Either we do the cuts on our terms or foreign bondholders will do it on theirs. I know which I prefer.”

  Wally sank deeper into the couch, a Washington titan humbled by the accountant from the sticks. The titan was human after all, and he was finally awakening to the reality of the situation. Amid the gloom, Andrea felt a twinge of pride. She had achieved her first political victory.

  The president was coming to grips with reality too. “I spent my whole political career planning, scheming, and plotting to become president,” President Murray said. “Hell, every decision I’ve made since I was a freshman at Yale was meant to lay the groundwork for running for president. I finally make it, after all those bus rides and campaign stops, all those state fairs and fried food, and for what? I don’t even have a chance to put my stamp on anything. I knew when I was in Congress the debt bomb would go off one day. I just never thought it would go off the minute I got into the big chair.”

  “Mr. President, the country handed you lemons,” said Andrea. “Forty trillion lemons, in fact. But this can be your finest hour. You’re being called on to solve the greatest financial crisis this country has had since the American Revolution. You have a chance to write your name in the history books.”

  Wally nodded, his face forming the slightest of smiles. The old political strategist was slowly coming to life. “How do you suggest we sell this shit sandwich of a budget to Congress?” he asked.

  Andrea thought for a moment and then perked up. “An old accounting colleague of mine used to say, ‘When all else fails, commit candor.’”

  “What’s that supposed to mean?” asked Wally.

  “Just tell the country straight. These cuts are happening no matter what, so people might as well get the truth. The emergency budget is the only thing standing between the United States and full-on economic collapse. And I mean dumpster-diving, zoo-animal-eating, fleeing-to-Canada collapse.”

  “That makes sense. Though I’m not sure I’d put it quite like that,” Murray said.

  He stood up from the couch. Deciding on a course of action seemed to have energized him. His hangdog look was gone, replaced by purposeful pacing around the Oval Office. Now he was deep in thought, as if writing a speech in his mind.

  Wally pulled out a notepad and paper and started scribbling notes.

  “What are you thinking, Wally?” President Murray asked.

  “It’s all we’ve got,” he replied. “Go for broke with the public. No pun intended.”

  “Okay. Wally, get some time on the networks for eight o’clock tonight and get a speech written. We need to get this emergency budget out there on our terms without creating mass economic panic.”

  “Yes, sir.” Wally rushed out of the Oval Office to execute the president’s instructions.

  Andrea got up from the couch and headed to the door.

  “Andrea?”

  She turned to face the president.

  “Yes, Mr. President?”

  “Thank you. I needed that. So did Wally. We’re going to get through this.”

  “No, thank you, Mr. President. You’re the only one who can make this happen. It’s us or bust.”

  President Murray entered the Oval Office at seven o’clock, an hour before he was scheduled to speak. Cameramen from every major television and cable network were preparing their cameras and microphones in the Oval Office. The sun had just set, but its glow was still visible over t
he horizon through the windows.

  He seated himself in the chair behind the Resolute desk. Andrea stood off to the side, taking in the magnificence of the Oval Office. The small bust of Winston Churchill sat on a table to the right of the fireplace. Above the bust was an oil painting of buffalo on the American frontier. Directly above the fireplace was the famous oil painting, Washington Crossing the Delaware. To the left of the fireplace was a painting of the War of 1812’s epic Battle of Lake Erie. There was also an oil painting reproduction of the famous photograph of Buzz Aldrin on the moon and, beneath it, a small moon rock on loan from NASA.

  The artwork and artifacts represented the pinnacle of American achievement, grit, and determination. Andrea’s contribution to the long list of American achievements? Declaring national bankruptcy. She swore the artifacts were looking at her in disgust.

  A makeup artist entered the room with his kit to prepare Murray for the speech.

  Murray waved him away. “Lose it all. I’m not going to spend money on makeup and wardrobe when people are losing their Social Security and health care. America is just going to have to get used to seeing me as I am.”

  The makeup artist glanced at the cameramen. One shrugged his shoulders. The makeup artist slowly left the room.

  Andrea settled into a finely upholstered blue-and-gold chair in the adjoining television room as the on-site producer recited the countdown to the speech. When the producer said, “On the air,” the somber-faced President Murray appeared on her television screen.

  “My fellow Americans,” Murray said in a somber tone. “For twenty years, this country has lived far beyond its means. Every year we borrow between five hundred billion dollars and one trillion dollars to meet our budgets. We borrow two million dollars every hour. In fact, it is hard to claim that the American government budgets anymore. The American government simply spends.

  “We spend well over a trillion dollars a year on Medicare, Medicaid, and Social Security. We spend seven hundred and fifty billion dollars a year on defense and more on innumerable activities large and small. Disaster relief and recovery. Road and bridge construction grants. Education grants and loans. New federal buildings in the United States and abroad. School lunch programs. Foreign aid. Scientific and medical research. Rural internet programs. Urban housing programs. Grants to the arts. An ever-growing federal workforce. The government is so enormous, no single person could tell you everything it does.

  “We’ve also spent enormous sums on investigations, impeachments, and all manner of other political circus stunts. They aren’t free. Every time you see a congressional investigation, there are loads of lawyers, staff, and other expenses for which we are paying. Treating politics as sport and spectacle has costs.

  “For too long, Congress has been unwilling to make any spending cuts. We acted as if the American government had unlimited funds to do whatever it wanted. We blamed every problem on budget cuts or a lack of funding.

  “In fact, the money was coming from you, the public. But not just the American public. The money was also coming from foreigners willing to loan the United States government money. Some of these lenders loaned us money because they thought the United States was a solid investment. Others loaned us money to gain leverage and power over the American government. Our political leaders on both sides didn’t know or care where the money was coming from or why people were lending it to us. They were glad to have the money to spend it on whatever they wanted at the time. This cycle of borrow and spend has continued for over two decades. Our national debt currently stands at forty trillion dollars.

  “My fellow Americans, the bill has come due. Those who once were happy to loan us money no longer are confident the United States can pay them back. Those who once loaned the United States government money by buying American bonds have made clear they will do so no longer.

  “Without these borrowed funds, the United States can no longer engage in deficit spending. America can only spend what it takes in as tax revenues. Just as your family must make ends meet by paying your mortgage and credit card payments while paying your living expenses, so, too, must the United States government.

  “This is not ideology. This is cold, hard mathematics.”

  Andrea was amazed by the president’s demeanor. He seemed preternaturally calm. His arms were still. The wrinkles between his eyebrows were gone.

  Only a pro could be this focused giving a speech this difficult and not reveal a hint of stress, she thought.

  “Tomorrow I will send emergency budget legislation to the Congress that will cut federal spending and ensure we will not have a deficit this year or in the coming years. The federal government has revenues of three-and-a-half trillion dollars. And that is exactly what we will spend. One trillion dollars will go to interest payments on federal debt. Another one-and-a-quarter trillion dollars will be used to begin to pay down debt principal. The rest will go to regular federal budget items.

  “I have always prided myself on being straight and honest with you, my fellow Americans. Tonight is no exception.

  “Federal spending in most major categories will be cut or frozen. We will immediately stop spending on federal grants and loans in all forms. This includes federal research grants and student loans. We will halt construction of federal facilities and all federally funded road and highway projects.

  “We will substantially cut other government luxuries. We will not illuminate the Capitol, the White House, and the monuments in Washington at night. No more government-sponsored pageants and fireworks on the Fourth of July.

  “Defense spending will be cut to the bare minimum. We will fund the military at an operational level. We will freeze development of new weapons systems. Even military flyovers of sporting events are out.

  “We will furlough a substantial part of the federal workforce.

  “Travel budgets will also be cut to the bare minimum. A single presidential trip overseas costs millions of dollars. Even foreign trips of other government officials and members of Congress cost enormous amounts of money. From now on, we will travel light. There is no reason we cannot stay in the airport Hilton instead of the downtown Ritz-Carlton.

  “We will also significantly cut spending on immigrants entering the country illegally. The government has annually awarded multi-million-dollar contracts to companies to provide food, shelter, and basic necessities to immigrants who illegally cross our southern border. My heart breaks for them, but we simply do not have the cash to continue to pay for these expensive support contracts.

  “Foreign aid will also be cut. As generous as America is, we have borrowed much of the aid money we have donated to other countries. The pledges of funds we have made after natural disasters all over the world have come from money borrowed from China, Japan, European countries, or the American public. In effect, the American government has served as the middleman for a transfer of aid payments to foreign countries.

  “The government must also raise revenue quickly. Therefore, the emergency budget calls for an immediate tax increase to raise the highest tax rate to sixty percent for individuals making over five hundred thousand dollars, forty percent for individuals making between two hundred and fifty thousand and five hundred thousand dollars, and thirty percent for individuals making between one hundred thousand and two hundred and fifty thousand dollars.”

  The president hesitated. Andrea sat up in her chair and pressed the remote control to raise the volume on her television. It was a habit she’d picked up from her father. Whenever a ballgame announcer raised his voice to announce a “deep fly ball,” Andrea would immediately reach for the volume dial and crank it up.

  “Finally, we have no choice but to cut Medicare, Medicaid, and Social Security. Starting tomorrow, the government will drastically reduce Social Security checks. Medicare payments will be cut significantly as we restructure the program to cover only those who need it most.

  “My fellow Americans, this is a crisis of our own making. For too long, politici
ans have used promises of a never-ending series of services and benefits to get elected and reelected, but no one ever told you where the money was coming from. Now, the money is gone.

  “America has survived the toughest challenges. Civil war. World wars. The Great Depression. The Great Recession. September 11. Americans have always risen to the occasion, from defeating Nazis or Communism to conquering the world’s deadliest diseases. We fight and win. This is just another challenge in our national journey.

  “I choose to look at every new event as an opportunity. Getting our financial house in order will be painful. But it will be a truly priceless gift to our children and their children to bequeath to them a financially stable nation unburdened by debt. Together, we will overcome this crisis as we have overcome all others.

  “Good night, God bless you, and may God continue to bless the United States of America.”

  The speech concluded, Andrea opened the door between her viewing room and the Oval Office a crack. President Murray looked out the window from the Oval Office onto the South Lawn and slumped in his chair, exhausted.

  She had an ominous suspicion her roller-coaster ride was just beginning.

  Mason seethed at his table in the basement pub of the Capitol Hill Club as he and his Debt Rebel colleague, Congressman Quentin Stokely, watched President Murray give his speech on the big screen television. Acorn had advised him to let the president make the first move in dealing with the bond boycott and the budget crisis, but his natural instincts demanded that he be controlling the situation and driving events, not reacting to them.

  “Who does Murray think he is, planning a budget without giving me so much as a courtesy call?” Mason grumbled.

  “He is the president,” Stokely replied.

  “And I’m the chairman of the House Appropriations Committee,” Mason roared. “The bastard doesn’t even give me a heads-up before he foists this horrible budget on the nation? See this?” Mason pointed to the special congressional pin on his lapel. “This is my ring, and he’s supposed to kiss it. If he thinks I’m just going to roll over and let him have his little emergency budget, he’s got another thing coming.”