I took my mask off as I walked out the door of Skyline Chili just outside of Batesville, Indiana, in June 2020. It was a beautiful summer evening, the sun was going down behind the trees, shining its last light on my 2010 Jayco Greyhawk Class C motorhome parked in the vacant lot next door.
It was the first day of a vacation adventure. We were checking an item off my wife’s bucket list. She had been talking about her fond memories of camping at Disney World as a kid since the night we met 25 years earlier. Now we were on our way to pick up my sister-in-law Jill and two nieces in Cincinnati for a long drive to Florida and then a five-day camping trip in the beautiful Disney Camp Wilderness. Life was good.
As I walked toward my rig, I admired her. She was getting a little older but was in great shape and up for the journey. In the last light of the sun, however, something didn’t look right. There was a strange shadow underneath the motorhome. As Tracy and the kids piled in, I bent down to inspect.
The expletives flooded my brain. One of the brackets holding up the RV’s black tank (the one for the poop) had snapped, the tank was hanging down barely supported by only one bracket, all of the odor seals had pulled loose. Even though the tank was empty, the smell was horrible. Panic set in.
As I got into the cab my wife sensed the stress. “What’s wrong?” she asked. “The RV has a problem, we need to try to make it Jill’s,” I replied. And then it hit her, “what’s that awful smell?”
“Well, that’s the problem, something is broken with the black tank, it’s not good,” I said. As the full magnitude of the problem permeated the air, she persisted in carrying on about the smell.
Finally, I had enough of her lamenting the stink. I turned to her and lectured her in my most emphatically annoying voice, “Look, I can’t drive this RV to Florida in this condition. Unless we find a solution, we are going to be out the price of those absurdly expensive hopper passes, and the absurdly expensive camp site, and the absurdly expensive meal passes. So yes, it obviously stinks, but that is not our main problem here, as of right now, this whole trip is a disaster.” Chastised, she sat quietly, just as my daughter came into the cab and yelled “what’s that smell?” I glowered all the way to Jill’s house.
Last week credit rating agency Fitch shouted out about the discernable stink permeating the fiscal house of the U.S. federal government. This recognition of the obvious came in the form of a credit downgrade on U.S. Treasury notes and bonds, taking the credit rating of the United States down to AA+ from AAA. The stock market took this news in stride, U.S. Treasury bonds were flat the day after, and the dollar traded slightly higher within its range. Or in other words, nobody cared.
There was a time when this type of news would have rattled markets. Now it served as more of a curiosity. The question is why?
I think the answer is not that the stink of the downgrade doesn’t matter, but rather that it so obviously does matter that something has to be done or the trip toward American prosperity may not go on, and finally we may all know it.
With $32 trillion in debt, a projected $1.5 trillion 2023 deficit and fiscal governance standards that at best can be called “abysmal,” the federal government may just be reaching the end of its prominence in the everyday life of Americans. See, America has a math problem. And math doesn’t bend to propaganda, it doesn’t campaign, it doesn’t spin on Sunday morning talk shows.
Math just compounds, and with interest rates going from effectively zero to now over 5%, the compounding interest on the government’s debt now exceeding 100% of our economic output (GDP) will soon adjust and then begin sucking up the air in the Washington, D.C., room.
This year the federal government will take in a record amount of tax revenue, it has already spent right through this windfall and the year isn’t close to being over (source: Treasury.gov). Sure, blame COVID, blame Biden, blame Trump. Blame whomever your bias wants you to blame, but it’s the system, the entrenched interests and process that are the problem, and Fitch just attempted to state the obvious.
The stink is now undeniable. In order to continue this American journey, repairs are needed. I applaud Fitch for having the audacity for calling it out, even if no one listened.
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