by MN Gordon, All News Pipeline:
– What Will The Unprepared Do When It All Comes Crashing Down?
Put my dusty morals on the dusty moral shelf
Try to do for others but I care more for myself
My life is like a desert just a lot of sand and rocks
Try and buy some peace of mind and find the store is locked
You can’t get water from a bone dry wishing well
– Bone Dry, by the Cadillac Tramps
Letters of Doom
Treasury Secretary Janet Yellen is a woman of letters. We like this about her. Because, like us, in a world of text snippets, tweets, and animated gifs, she finds the traditional exchange of letters to be most civilized.
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Her academically trained brain – ensconced beneath a white hair shelmet – guides her thinking. With purpose and intent, Yellen puts fingers to keyboard and taps out letters to Congress warning of imminent doom.
Her most recent letter, published on Department of the Treasury letterhead, and addressed to The Honorable Kevin McCarthy, rolled off the printing press on Monday the 1st of May. The objective of the letter was to correct grave misinformation she supplied in a prior letter to Congress.
Specifically, on Friday the 13th of January, Yellen, sent a letter to Congress informing legislators that the statutory debt limit of approximately $31.381 trillion would be eclipsed on January 19. And that the Treasury must resort to extraordinary measures – accounting maneuvers – to delay a U.S. government default.
Yellen also noted in the January 13 letter that, “it is unlikely that cash and extraordinary measures will be exhausted before early June.”
This, of course, was Yellen’s best estimate based on the Treasury’s projection of spending and incoming tax receipts. But, alas, things in life rarely work out as expected.
In this case, federal tax receipts this tax season have come up short. Thus, less cashflow is coming in than Yellen had anticipated. And, as a result, the federal government is just weeks away from going broke.
Corrections and Retractions
In case you missed it, here are the corrections and retractions Yellen recently provided in her May 1 letter to Congress:
“In my January 13 letter, I noted that it was unlikely that cash and extraordinary measures would be exhausted before early June. After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time.”
Perhaps the work furloughing of federal workers will buy an extra week or two before the breakthrough point. Who knows?
Regardless, here at the Economic Prism, we appreciate Yellen’s predicament. She’s not the one that first authorized the spending. She’s not the one that failed to balance the budget. She’s not the one to establish the phony debt ceiling.
Still, she’s willing to fall on her sword in self-sacrifice for the failings of all of Congress. So very valiant.
The way we see it, communication can take place in different forms. In fact, communication is often most effective when it’s delivered by actions rather than words.
Yellen has chosen, through letters, to prompt Congress to raise the debt ceiling so that it can meet its existing obligations.
We posit that a more effective means of communication would be for Yellen to first let spending crash through the debt ceiling; then, she should write a stack of rubber checks. This would be a form of communication which even a blockhead like Chuck Schumer could understand.
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