• Play the sound file (duration 39m57s).
[Music clip: From Haydn's Derbyshire Marches]
01 — Intro. And Radio Derb is on the air! This is your imponderably genial host John Derbyshire with news from far and wide. Well, mostly from near and narrow this week, as I think every one of our news items today is domestic. That comports with the mood of the hour, though. We've got some big serious problems to deal with here in the U.S.A., and the rest of the world will have to go hang for a while. First and foremost of those problems is our national economy.
02 — The debt limit: history. And within the matter of the national economy, the first order of business for the nation right now, and the first thing a political commentator has to address himself to, is the political fight over raising the debt limit.
The story so far: Up to World War One, if the U.S. government wanted to borrow money, it had to ask Congress to approve each act of borrowing. Then — and here you can start hissing and booing if you like — then in October 1917 Congress passed and President Woodrow Wilson signed the Second Liberty Bond Act, which changed the rules, allowing Congress to just set an overall limit for government debt. Since then the government has been able to borrow as it pleased within the limit.
That's the regime we still live under today. There is a school of thought — Bob Bartlett's been pushing this line, and Senator Chuck Schumer seems to have picked up on it — that says the debt limit rules established by that 1917 Act of Congress are unconstitutional, as they violate Section 4 of the 14th Amendment, quote:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing of insurrection or rebellion, shall not be questioned.
End quote. This was part of the constitutional clean-up after the Civil War, and the main idea was to affirm the validity of Union debt while denying that Confederate debt had any similar standing. Still, you can make an argument that the debt ceiling is unconstitutional since it's statute law, trumped by the Constitution.
By all means make the argument; but we've lived so long with the debt ceiling now, it's fixed in people's minds like a law of nature, and if the feds try to spend over it, all hell will break loose, whatever the constitutional lawyers say.
The debt limit was first raised past one trillion dollars in 1981. Since then it's been raised 19 times — roughly once every year and a half. The last raise was in fact a year and a half ago in February 2010, to 14.3 trillion, so that's our current limit.
Since it's been a year and a half since the last raise, you could say it's time for another one. You could say that, except that that last raise, in February last year, was the biggest ever at almost two trillion dollars. Put it another way, just the size of that last increase in the limit was nearly twice as big as the actual limit in Ronald Reagan's first year.
Furthermore, that raise last February came with attached legislation insisting on pay-as-you-go rules for government spending. That is, any extra new spending on one program had to be matched by equivalent cuts somewhere else. Pay-as-you-go sounds like a great idea, but in fact whenever Congress adds pay-as-you-go rules to bills (which they've been doing for 20 years to my certain recollection) they make sure that the rules have enough exceptions and exemptions to drive a coach and four through.
That is part of a general principle that applies to all Congressional action on spending. Congress is never more cynical than when pretending to restrain federal spending. Any legislation they pass in that regard has more holes in it than a Casey Anthony alibi; and the leakiness is not accidental. Spending restraint legislation is designed to leak. Congresscritters live to spend, even the decent and patriotic minority of them. And don't be too hard on them: they live to spend because that's what we, the great American public, want them to do. You may not want them to, and I don't want them to, but the public at large, Democrat and Republican, wants them to. Ask your nephew on a student loan; ask your grandad on Social Security and Medicare; ask your neighbor whose mortgage got bundled up in a FNMA bond; ask your cousin who works for Lockheed Martin on military contracts.
Well, that's the history; now here we are in July 2011 with the government operating under a 14.3 trillion dollar credit limit. On the current rate of spending — both spending on actual programs like defense and entitlements, and also payments to holders of government debt — the federal government will bang up against that limit on August 2nd, less than four weeks from now.
So what has to be done? Or if it's not done, what happens?
03 — The debt limit: options. Well, there is a big decision tree of things to do.
The first branch of the decision tree is whether to go for radical fiscal reform, or not to. By radical reform I'm talking about major structural changes in spending and/or revenue. The radical-reform branch itself splits two ways: Radical socialist reform, or radical free market reform. In radical socialist reform the federal government takes a controlling interest in key major industries, and loads the rest of the private sector down with new taxes and regulation. In radical free market reform, also known as the "dash for freedom," there is a massive retreat of government, entire federal departments — Energy, Commerce, Agriculture, Education just for starters — are shut down, the IRS and corporate taxation and the Federal Reserve are abolished, entitlements are voucherized or privatized … the whole Ron Paul program.
Those are the options if you go for radical reform. Naturally I myself would go for radical reform — the "dash for freedom" variety. I've seen socialism at close quarters in several different countries, and you can keep it.
Radical reform of those kinds aren't really on the table right now, though. There is no big enough constituency for either socialism or Ron Paul-ism. My dash for freedom would upset all the people who depend on entitlements, or are looking forward to depending on them; and that's a mighty lot of people. The socialist option falls afoul of the fact that too many citizens know too much twentieth-century history. They know what happens when you crush private enterprise and put government bureaucrats in charge of a peacetime economy. What happens is the U.S.S.R. at worst, present-day Greece at the best.
So if radical reform's off the table, what's on it? Here the decision tree takes another branch. No radical reform? OK then, you have two options: kick the can down the road, i.e. by raising the debt limit with some kind of conditions attached, or default.
If we choose to kick the can down the road, the tree branches again. There are half a dozen options for how to kick that can, depending on the conditions Congress attaches. From here on in, it's all politics.
Kicking-the-can-down-the-road-wise, Barack Obama's preference is to kick it past November 2012. Failing that, if we are to have some major crisis between now and then, his very strong preference is that there be some clear way to blame that crisis on Congressional Republicans.
The first preference explains his offers of compromise — most particularly of spending cuts. These offers are bogus, of course. The offered spending cuts are all back-loaded. So we hear about four trillion dollars' worth of cuts in ten years, but most of the cuts turn out to be in years seven, eight, nine, and ten. The second preference — the preference that, if some crisis is to occur before next year's election, it be something he can blame on Republicans — that preference explains all the class war rhetoric about corporate jets and oil companies. The President's line will be: "See? I tried to solve these problems but Republicans were more intent on protecting their pals in Big Business." Obama's covering all bases here.
For Congressional Republicans looking to kick the can down the road, which is to say most Congressional Republicans, the converse applies: kick it a way down the road, but not far enough that it's out of sight next summer. Keep the crisis simmering. It's a risky strategy, given that all the mainstream media will do all they can to help Obama make everything look like the GOP's fault, but it's all they've got short of radical reform, which they have neither the guts for nor the public support for.
If we don't kick the can down the road, we then find ourselves out on the uppermost branch of the decision tree, the one labeled "default." In this scenario Congress does nothing. They just sit on their hands and wait for the poop to hit the propeller.
The interesting thing about this option is that nobody quite knows what would happen. To some degree the President would be in control. He would have to decide who gets paid and who doesn't. In bankruptcy, when a company goes belly up there is a schedule prescribed by law, a schedule of priorities as to who gets paid after the liquidation of whatever assets the company has left. I forget the details, but I remember that unpaid employees and bond-holders are up at the top of the schedule, trade creditors and holders of common stock way down at the bottom.
There is no such schedule for when a nation can't meet its obligations, and anyway no authority to enforce the schedule if there was one. If the U.S.A. hits its credit limit on August 2nd, who get paid and who gets stiffed? With Obama in charge of the decision-making, it would be his client groups who get paid: unionized public sector workers, welfare recipients, the education rackets, the race lobbies. The ones stiffed would be bond holders, both foreign and domestic, red states, perhaps military payrolls, any monies payable to any group not supportive of Obama.
But default is really an open situation. Nobody knows the psychological effect on international financial markets. There are sober, serious people who'll tell you that a default in August will bring down the whole global system. I don't know enough to refute them. It's an open situation.
For just that reason we'll get some version of kicking the can down the road. Politicians hate open situations.
And yet … all that is to talk about the political realities. As a commenter on Larry Kudlow's blog said: Sooner or later political reality gets trumped by real reality. That's why I keep telling you that all these political maneuverings are just a shadow play. Politicians are naturally absorbed in the political reality. Behind them, though, the tsunami is building. My guess is that before next year's election, real reality will have taken control.
04 — Real reality. What is real reality going to look like?
First off, it's going to look awfully expensive. Lawrence Lindsey, a former governor of the Federal Reserve, had an interesting piece in the Wall Street Journal the other day. Lindsey pointed out that interest rates are abnormally low, so the Treasury is borrowing money at bargain-basement rates, less than three percent. The normal rate this past couple of decades has been more like six percent.
If interest rates rise back to that normal level, our payments on the national debt will rise correspondingly, costing us five trillion dollars over the next ten years — easily enough to wipe out the spending reductions in even the boldest plan proposed to Congress. And of course, as I've just pointed out, even the boldest Congressional plan to cut spending, any Congressional plan to cut spending, leaks like a sieve because it's designed to.
And interest rates will rise. Foreign lenders might be willing to lend at low rates when we're showing signs of a recovery, however feeble. If we stall, or go back into recession, they'll be demanding bigger coupons.
It's the same with growth. The budget Obama proposed in February assumes growth of four percent, 4.5 percent, and 4.2 percent in the next three years. Historically, though, economies coming out of a major financial crisis plateau at 2.5 percent, and realistic current projections make it doubtful we'll even attain that.
The difference between the rosy numbers for anticipated growth and the pallid numbers for actual growth will translate into additional debt of four trillion just in those three years, wiping out the entire ten-year saving Paul Ryan promised us.
(Lindsey's article is in the June 28th Wall Street Journal. Its title is: "The Deficit Is Worse Than We Think.")
So here's the bad news once again, folks. The U.S.A. is living way beyond its means. We've all got used to doing so; nobody really wants it to stop, and our elected representatives behave accordingly. Yet it must stop. As a great economist once observed: "If a thing can't go on for ever, it won't."
The extravagance of our federal government can't go on for ever, and it won't. Radical reform will happen. Since there is no public will to make it happen, it will happen against our will. The juggernaut will go over the cliff, and we shall live amongst the wreckage.
I predict that the early years of living among the wreckage will be very hard. Certainly hyperinflation will be a factor; so will a general breakdown of law and order. After that we shall adjust to some new level, grateful just for a degree of stability and security.
Our standard of living will be lower: the U.S.A. of 2020 will be a seedy, gaunt, hardscrabble kind of place. The retirement age will be 75, social security will be means-tested, and instead of going to a doctor when you're ill you'll self-diagnose with gadgets and buy medicines online from Bangladesh. There'll be no overseas military bases: the military will all be at home in barracks, trying to recover their reputation after putting down the food and gas riots of the mid-2010s. Tumbleweed will be blowing across deserted college campuses: if you want an education you'll log on to a credentialing agency and work through the courses at home, behind the heavy-duty wire mesh covering your first-floor windows.
Our children and grandchildren will not be bereft of entertainment, though. When they get tired of watching Indian pop singers or the latest Chinese landing on one of Jupiter's moons, they will amuse themselves by digging up our bones and smashing them to pieces with 14-pound hammers.
05 — Casey Anthony acquitted. Other than the coming catastrophe, the biggest news of this week was the acquittal of Casey Anthony in the murder of her infant daughter three years ago.
Following the commentary on the acquittal was a bit dismaying. One strong theme was: "Casey Anthony is a simply terrible person and therefore she should have been found guilty." On the evidence we have, I'll certainly allow that Casey Anthony is an appallingly awful person. Unfortunately that's not a crime. Crimes have to be proved in courts, under tried and tested procedures. It's dismaying that so many people seem not to understand this.
A 19th-century British jurist was just getting into his carriage when a friend came up. "So," said the friend, "you're off to administer justice, then." Replied the jurist: "Certainly not. I'm off to administer the law."
If you don't think justice was done in the Casey Anthony case, I'm of a mind to agree with you. The law was done, though; and in this fallen world, that's as much as we can reasonably hope for. It's more than people in most of the world's countries can hope for, so be thankful you're an American. (If you are an American: no offense to our overseas listeners.)
The old cliché goes: "It is better that a hundred guilty men go free than that one innocent man be jailed." I'm a law'n'order man myself; I want criminals locked up, and preferably set to breaking rocks or working treadmills. The evidence is out there, though, and it's hard to ignore: we do in fact lock up a lot of innocent people. Check out innocenceproject.org for some hair-raising cases.
All sorts of qualifications need to be introduced here. I had a friend back in England who worked as a probation officer. I asked him one day: "How many people in jail are innocent?" "Innocent of what?" he replied. "Innocent of the exact thing they were sent down for? Five percent. Innocent of anything at all? Zero point one percent. The cops frame up a lot of people. But they're bad people; we're better off with them in jail."
Still, if we're jailing innocent people at the rates suggested, letting the occasional guilty one go free doesn't look so bad. The truly bad types revert sooner or later anyway and end up in a cell. Pop quiz: Where is O.J. Simpson right now? Answer: in Lovelock Correctional Facility as a guest of Nevada Department of Corrections, serving a 33-year sentence for armed robbery. See, it all comes out in the wash.
So what happened to poor little Caylee Anthony, who didn't even make it to her third birthday? It's unlikely we'll ever know. My best guess, having raised two kids, is that there was some kind of accident and Caylee's dimwitted mother clumsily tried to cover it up. A two-year-old child is a fragile thing, and even attentive, loving parents will have a few near misses. My son, at about Caylee's age, had a TV set fall on him, fortunately without any lasting effect. The child of a parent who is not attentive or loving — like, say, Casey Anthony — will be even more prone to mishaps. So here's Casey Anthony looking at a child in a coma, or twitching in convulsions, and thinking it was her fault. People panic in situations like that.
The other possibility is that Casey found the child a hindrance to her partying, clubbing, socializing lifestyle, and cold-bloodedly decided to eliminate the problem.
I wouldn't rule that out: but such depths of depravity are, thank goodness, much rarer than ill-judged panic after a mishap. I'll go with the panic scenario as more probable.
Likely we'll never know. Casey Anthony might tell us some day, I suppose; but what reason to we have to believe one word out of her lying mouth?
06 — Last flight of the Space Shuttle. I just watched TV coverage of the Atlantis launch, the final Space Shuttle launch, thirty years and a couple of months after the first launch.
I watched that first launch, too, at rented lodgings in north London. Twelve years before that I watched Neil Armstrong step on to the surface of the moon. The previous Christmas I'd been spellbound, like everyone else, when Apollo 8 became the first manned spacecraft to go to the Moon, even though they didn't land.
Three years before that I'd gaped with astonishment and disappointment when Mariner 4 sent back the first close-up images of Mars, showing a cratered surface like the Moon's. We space buffs had expected to find all kinds of things on Mars: forests, canals, even cities and people; but craters? It was a let-down, I'll tell you.
Before that were the first orbital manned flights. Before that, the unmanned moon missions Ranger and Surveyor.
And even before all that, for those of us whose imaginations were caught by the strangeness and immensity of space and the possibilities of the future, there was science fiction and speculation, Ray Bradbury and Arthur C. Clarke, Asimov and Heinlein. I've lived through the whole business, the entire space age.
It's not over, of course. There is every sign the Chinese and Indians, maybe even the Japanese, are going to persevere with manned space flight, along with the Russians. Commercial space tourism might take off, so to speak, if the entrepreneurs can get the price down.
Unmanned space flight is a huge business, both military and civilian: especially military — it's believed that the United States military space budget has exceeded NASA's budget every year since 1982.
Scientific space projects will also go on. The New Horizons spacecraft will fly by Pluto four years from next week, completing the close-up imaging of what used to be called the nine planets, though Pluto's status has since been downgraded to "dwarf planet." There will be more missions, I'm sure.
What's ending with this last shuttle flight is the age of Americans going into space as a national endeavor. That age lasted just fifty years, from Alan Shepard to the present Atlantis crew, may they come home safely.
That age started in the late 1950s, when we saw ourselves as a united people, confident and full of energy, generating so much wealth we could allow our government to spend a few billion of it on great romantic public projects. We don't think like that any more. We're not a united people but a collection of squabbling tribes. We're not confident, we're despondent. Our energy has drained away in lawyering, financial juggling, tribal rancors, and futile wars in places of zero importance.
Government-financed manned space flight was the last expression of that vigorous, cocky, innocent America of the 1950s. That America is now so far gone, it's considered a bit disgraceful even to talk about it in approving terms. Women were trapped in the kitchen, blacks were barred from voting, Jews were kept out of the country clubs, top tax brackets were confiscatory … you all know the charge sheet.
Well, I remember 1950s America, though I only knew it from a distance. With all the blemishes, it was a mighty beacon of hope and imagination to those of us in the rest of the world, and Alan Shepard and Neil Armstrong and the others took that beacon into space. When Atlantis lands on July 20th — July 20th, for crying out loud! — the last feeble flickers of that beacon will be extinguished. We'll be in a different America.
Probably it will be a better America in many ways; but I'm sorry, I won't like it half as much.
07 — Miscellany. And now, our closing miscellany of brief items.
Item: Convicted murderer Humberto Leal was executed Thursday in Huntsville, Texas. Leal had raped and murdered a 16-year-old girl back in 1994. He was a Mexican citizen, and a very patriotic one to the end: His last words were "Viva Mexico!" The Mexican government had done all it could to interfere with the progress of justice, assisted of course by Mexico's ambassador in Washington, and Mexico's hand puppet in the White House. All to no avail: the ambassador even tried a last-minute appeal to Texas Governor Rick Perry, but Perry refused to pick up the phone. Good for him: I'm liking Rick Perry more and more. Quote from the Associated Press report on Leal's execution, quote: "The Mexican government and other diplomats also contended that Leal's case needed to be thoroughly reviewed," end quote. Excuse me? "Thoroughly reviewed"? This reptile was sitting on Death Row for sixteen years — just as many years as his victim, Adria Sauceda, was on this earth. In sixteen years, Leal's case wasn't reviewed thoroughly enough? Ye Gods! Oh, and here's a message from Radio Derb to the Mexican Ambassador: Nyah nyah!
Item: News that the Atlanta Public Schools system has been engaged in a huge book-cooking exercise to make its student test scores come out right, will not be news at all to anyone acquainted with modern educational practice, or even to anyone who's read my book We Are Doomed, which has a whole chapter on the stinking pit of corruption, wishful thinking, and bare-faced lying that is modern American education. Quote — I'm quoting here from The Atlanta Journal-Constitution, July 6th, quote: "For teachers, a culture of fear ensured the deception would continue. 'APS is run like the mob,' one teacher told investigators, saying she cheated because she feared retaliation if she didn't. The voluminous report names 178 educators, including 38 principals, as participants in cheating. More than 80 confessed." End quote. I called it. Quote from my book, Chapter 6, quote: "When money and jobs are offered to people willing to say they will do something that nobody knows how to do [the] results will inevitably be: cheating, corruption, and cover-ups." End quote. Ho hum. There will be a lot more of these stories: brace yourselves. Under the No Child Left Behind Act, every student has to be above average by 2014. The teachers and administrators will make sure they are. By any means necessary.
Item: As Radio Derb goes to tape here, the June employment figures have just come out. They are terrible: Just 18,000 jobs added in June. That's a net figure: Private businesses added 57,000 while government cut 39,000. All that's happening while more workers come onto the jobs market: a hundred thousand a month just from legal immigration, which we're not supposed to talk about except to swear that immigration is a wonderful, wonderful thing. The actual net number of unemployed workers rose almost 175,000 to 14.1 million, pushing up the unemployment rate to 9.2 percent. On top of that, people who do have jobs are earning less: Average hourly wages declined last month. Forward indicators are dismal too: The average work week declined to 34.3 hours, from 34.4, which means employers demanded less work from their existing staffs, the opposite of what happens when companies are planning to hire more workers. This is awful. The economy is basically as flat as a pancake, and beginning to crater in places. If it goes back into recession, there's no more stimulus to perk it up. People scoff a lot at my pessimism, but look at those numbers. If you're not a pessimist right now, you're not paying attention.
Item: July 4th came and went since our last broadcast, and I'd like to give a nod here to that. I emit a lot of gloom and doom here on Radio Derb, and I really do think we're going to go through a rough patch before we find some new point of political and social balance, with I hope our ancient freedoms still intact. I have to say, though, even for an Eeyore like myself, it's hard to be gloomy on the Fourth. Those lovely bright flags everywhere; the fireworks; the barbecues and neighborly get-togethers — I attended a great one last weekend, and we hosted a second one … America's still here, and it'll go on being here, in some form or another. We weathered the Civil War, the Depression, and the death of Vaudeville: we'll weather whatever is coming to us this next five years.So … Americans, keep your peckers up!
08 — Signoff. On that uncharacteristically cheery note, ladies and gentlemen, we leave you. Tune in again next week for more from Radio Derb. To see us out, here's Gracie Fields with another dash of cheerfulness. Never say we don't strive for a balanced approach here …
[Music clip: Gracie Fields Sing As We Go]