The Bankrupt States of America

(Mark Noonan) – Nevada News Bureau reports that various federal payments to the States which are due in June will be pushed back to July. 17 Nevada counties are affected and according to the NNB report, everyone seems to be taking it in stride. No worries, we can wait a few weeks for the money.

And, truth be told, we can. That, right there, should be a clue as to how much of our State and local spending can really be classed as “vital”.

Churchill County, for instance, got about $2 million dollars last year and is now telling us that its no big deal. For a while. I don’t know about you, but if my boss were to short me $100 and advise me I’d get it next month, I’d be rather upset. This is $2 million dollars – and by not needing it right away, Churchill County revealed that it could probably do without it, altogether.

But the money will come just as it has come, year after year. As the United States has sunk deeper in to debt, here comes the money. A million here, a million there and none of it absolutely, vitally necessary for the proper, constitutional functions of government. How can I be sure about that? Because if the money was for the local police or firefights, they’d be shouting for it – no one wants their house broken in to or burning down.

Bit of a different story when its the budget for a few superfluous bureaucrats on the city, county or State payroll.

So much for just what they are spending our money on. But what really made this story catch my eye was a report I saw last week over at the Zero Hedge financial blog. Seems that at one point on June 14th, the US Treasury was down to about $4 billion cash on hand. Think about that, the United States government – governing 300 million people in a $13 trillion dollar economy – had less money on hand, by far, than Bill Gates, chairman of Microsoft.

Putting these two stories together, I get the distinct impression that the well is at long last running dry. A government like the United States having only $4 billion on hand (and, sure, more swiftly came in – but, still) and being forced to delay a relative pittance in payments to local governments tells me the frightening truth: we’re bankrupt.

We can expect that some more Chinese bond purchases will give us the money to keep the lights on, for now. How long can we go on? Some reports I’ve read indicate that we hit the point of default in 2015. Others say 2013. We’ve also heard that Social Security – supposedly in the black for a few more decades – has started to run in the red this year. I think, my friends, that we are at the crisis.

This is why November’s election is so important. If we don’t balance our budget very soon (as in over the next few years) then we could be faced with absolute financial catastrophe. Obama and his Democrats either don’t realize or just don’t care what they’re doing. But we must grasp this fact: the money is gone. Government must be reduced to its bare minimum and we must start to pay off the debt we’ve built up.

The party is over, and it is time to pay the piper.