There must be some kind of way outta here, said the joker to the thief

There’s too much confusion, I can’t get no relief

­-Bob Dylan

The two-party system has always held down Americans from making serious policy altering decisions, and both can’t get their constituents out of the current economic mess: As previously revealed, the spending cap has reached its limit of $28.5 trillion, having set the 18th of October as a deadline for the US to deal with its debt ceiling or run out of money, literally. 

The GOP reprieves, with a catch 

After heated debates, mutual accusations of putting the lives of hundreds of millions of citizens on the line, and the possibility of democrats modifying the filibuster rule, a deal was reached between the Democrats and Republicans guaranteeing an extra spending limit of $480 billion. 

The decision was taken two weeks ago, with Minority leader Mitch McConnell giving leeway to his opponents in order to implement a stop-gap fix to the issue by allowing 10 Republicans to break ranks and vote with 50 Democrats, thus securing supermajority for the debt-ceiling increase. 

Yet the matter is far from concluded, as this legislation only covers federal borrowing until December 3, coinciding with the day in which funding for vital federal agencies and programs is bound to expire. 

McConnell and his Party have vowed not to partake in a similar voting come December, placing the matter in the hands of the Blue Party, with the latter refusing to take the decision by adopting a “reconciliation vote,” which signals another showdown at the Senate or worse: a major deadlock that would paralyze the country in its entirety. 

The GOP is fervently opposing a complete removal of the ceiling as to disrupt Biden’s infrastructure bill set to unfold for 10 years ahead, with Senator Ted Cruz saying “Democrats had complete authority to raise the debt ceiling, and to take responsibility for the trillions of debt that they are irresponsibly adding to this country.” 

For the two parties, this is a battle of legacies, for lifting the ceiling would ensure an increase in taxation as to recoup the expenses over the next 10 years, which clashes with the electoral ambitions of both parties, notably the GOP which is fervently attempting to lure in the voters without the populist Trump appeal. 

Yet still reeling from the consequences of the pandemic, the US has been experiencing massive economic difficulties that have laid their shadows upon all sectors. To top it all off, a nation with $25 trillion in debt should not be pondering on reforms, notably as its GDP has become equivalent to its debt for the first time in its recent history. 

By delving into the recent spending sprees performed by the three last US administrations, one fact becomes clearer to the naked eyes: The current fiasco could have been avoided. 

Spending for Top Guns

 I guarantee you, when war becomes that profitable, you’re going to see more of it.
-Former CIA contractor Chalmers Johnson

The year is 2000, and for the first recorded time, the US has reached its lowest federal deficit with dreams of prosperity reigning over the American economic mindset. The Brooking Institution even declared the surplus that began accumulating in the late 1990s as “one of the supreme budgetary accomplishments in American history.” 

Yet come 2001, George W. Bush declares a “war on terror” and subsequently inflated the military budget to unprecedented heights. The US has spent an estimated $6.4 trillion on its ensuing wars. 

Such actions eventually became a political bipartisan tradition, with all successive administrations following suit and gradually increasing the military budget under alibis of defensive needs to counter the Taliban at one point, the Russians at another, and - most recently - the Chinese. 

With the recent humiliating pullout from Afghanistan, alongside the Chinese having already won in the Artificial Intelligence (AI) race, one might wonder about the necessity of such a highly bloated budget. The AI victory alone constitutes a key component of worldwide military supremacy, in spite of China’s military budget ranking as second to that of the US with only a third of its value. This goes to confirm that the machinery governing the US military budget is that of lobbyists and the private sector of the military industrial complex - both of which have been pushing all administrations to the brink of bankruptcy while racking in billions without any substantial breakthroughs or achievements on the ground.

It is interesting to note that the top 5 military contractors in the world are in fact US companies, namely Ratheon, Lockheed Martin, General Dynamics, Boeing, and Northrop Grumman, all of which have amassed $2.02 trillion since the beginning of the war. 

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The overall US military budget for the past two years alone stands at an approximate $2 trillion, which almost constitutes 7% of the overall budgetary deficit. 

Funding Israeli aggression 

An additional facet to the thriving of the military expansionist business is the massive investment the US places on the support of “Israel”, considered the quintessential door for US influence in West Asia and North Africa given its strategic placement on Palestinian land. What the US cannot directly deal with, it sends “Israel” to do its bidding for, thus securing an everlasting multifaceted influence. In this sense, budgetary and military support is always being hemorrhaged either to prevent a financial and societal instability in the Israeli society or simply to fortify the defenses to reinstate Israeli military dominance over the besieged people of Gaza and the rest of the occupied territories. The budgetary contributions directly taken out from the US taxpaying citizens have reached a confounding $3.8 billion in 2019 alone as part of a decade-long $38 billion Memorandum of Understanding signed in 2016 under the Obama administration. It is the third agreement of the sort following the two signed under the Clinton and W. Bush administrations. 

Moreover, the recent debacle surrounding the vote for the funding of the Iron Dome defense system, valued at a staggering $1 billion, showcased a clear disregard for the needs of US citizens, notably as it came only weeks ahead of the debt ceiling crisis. Had the two parties been so adamant on eluding the impeding catastrophe, they would have opted for preventing the passage of such a ridiculous bill instead of securing a nearly unanimous vote, forcing even previous “nayers” at declaring “present” at the last moment under the pressure of key partisan figures.

Innumerable tax cuts

Along his military venture, former president George W. Bush implemented a series of financial measures that warranted the eventual downfall of the US economy along with increasing the economic class gap. These measures, commonly referred to as the “Bush Tax Cuts”, have been described by experts as “the single most consequential piece of tax legislation enacted in the last quarter-century.” 

The Obama and Trump administrations followed suit, enacting many legislations that were in essence tax cuts under the guise of “incentive” purposes. 

The cumulative effect of these tax cuts by 2025 would have risen to $10.6 trillion - enough to have covered around 40% of the current deficit, notably as only the richest 1% would have benefitted from $2 trillion in cuts. 

These various incarnations of tax cuts only served to ease economic restrictions on the richest whilst simultaneously ballooning the deficit and debt, eventually becoming a propeller of the current crisis. 

Furthermore, the Pandora papers have clearly demonstrated that the US is ostentatiously the biggest tax haven with countless numbers of entities and individuals using it as a leeway to escape their financial duties, hence jeopardizing all semblance of financial stability the country might have had left. 

Corporate-friendly stimulus bill 

The $2 trillion pandemic stimulus bill - or the CARES Act -, hailed by many lawmakers and financiers as the salvation of the threatened US economy, turned out to be no more than a mere façade of another mass governmental sponsorship to major multi-billion dollar corporations that have repeatedly benefitted from massive tax cuts and tax refunds.

The CARES Act allocated half a trillion dollar for large corporations, whilst the entirety of the American populace had $603 billion allotted to them, thus equating the needs of citizens with those of the corporations under the presumption of keeping the US economy afloat. 

Many of those companies seem to have brokered a deal through their lobbyists that directly benefitted them, with offshore oil companies such as Diamond Offshore Drilling being refunded on their taxes in order to pay bonuses for their executives amidst a time when workers were struggling to pay their rent. Most importantly, Diamond Offshore Drilling had already declared its bankruptcy yet nonetheless benefitted from the massive paycheck. 

An additional slap to the face would be the fact that this bailout does not cover the rights of workers, rendering in the process a large portion of the working force either jobless or within a grave medical and mental danger, which threatens the stability of the work market on the long run. 

As a matter of fact, the ruinous effects of such tactics have been surfacing lately, as reports have revealed that almost 4.3 million jobs were lost in August - approximately 4% of the nation’s workforce - with numbers expecting to grow, thus leaving the future of the US economy basking in uncertainty. 

“Resuscitating” the market 

During the pandemic, the Feds took the precarious measure of injecting the stock market with trillions of dollars, $3 trillion to be exact, under the guise of avoiding a new “Great Depression” and keeping the market afloat. 

Yet this measure, which mostly comes from the seemingly impractical practices of printing money, in parallel with issuing bonds and selling them, leaves the door open for countless dangerous possibilities; chiefly an irreversible massive inflation to recoup the adventurous expenditure. 

Ron Paul, the longtime Federal Reserve critic, declared that “what we’re working with now is fake money, a fake measuring rod,” notably as the national debt has exceeded $25 trillion, repealing the epithet of “sound money” from this practice. 

What the US might soon witness is hyperinflation linked to the economic bubble sustained through the Federal Reserve, which might burst at any given moment. 

What's next?

After mitigating the high seas of US bureaucracy, one must ponder the potential consequences of the US succumbing to its debts. No longer are we talking about federal expenditures, but rather earth-shattering ramifications that affect the US and consequently the global economy: One could expect then the reversal of the infamous Bretton-Woods agreement, the end of the dollar's reign as a global “unit of account,” and the final cementation of the multipolar world all pundits and analysts have been prophesizing about for the past 20 years. 

The path to getting to that specific moment in time is marred with intricacies too cumbersome for this piece though, as their details will be further discussed in the third and final part of this economic breakdown.