A scene from the 2000 movie “The Perfect Storm.” (Image: Warner Bros.)
Jan. 24, 2023 by David Silverberg
In 1997, the book The Perfect Storm told the story of the fishing boat Andrea Gail, which sailed into weather that was a “perfect” combination of three different storms blending into one catastrophic tempest.
Today, Southwest Florida is facing a “perfect” fiscal storm that blends three political squalls into a single horrendous gale that could prove as devastating in its own way as Hurricane Ian.
This storm is not of Southwest Florida’s own making. It’s the result of extreme ideas and doctrines being pursued in the nation’s capital. Nor will it affect Southwest Florida alone; the entire nation and the world will also suffer if the worst comes to pass.
However, Southwest Florida has unique factors that will increase the impact of this fiscal hurricane if it reaches full strength.
It’s a classic case of political passions being blindly pursued without an appreciation for their impacts on the ground or on the lives of everyday citizens. It’s also an illustration of the ways national policy affects an area as remote from the center of power as Southwest Florida.
The trend is dangerous, damaging and needs to be stopped. Fortunately, it’s the result of decisions yet to be made. So it’s not a perfect storm—yet.
Storm 1: The debt limit
On Thursday, Jan. 19, Treasury Secretary Janet Yellen sent a letter to congressional leaders informing them that the United States had reached its statutory debt limit. Treasury would now take “extraordinary measures” to maintain the full faith and credit of the United States. However, those measures would only sustain the nation until June.
In the US House of Representatives, extreme Make America Great Again (MAGA) Republicans are insisting that raising the debt limit be accompanied by major concessions by the White House. House Speaker Rep. Kevin McCarthy (R-23-Calif.) has largely followed their direction. President Joe Biden is maintaining that the United States paying its debts is a national obligation that transcends party politics and is refusing to treat it as a political football. If the House doesn’t act, the United States will go into default for the first time in its history. (A fuller explanation of the debt limit is at the end of this article.)
How would Southwest Floridians feel the impact of a US default? In a 2021 paper explaining the issue, White House economists pointed out that: “everyday households would be affected in a number of ways—from not receiving important social program payments like Social Security or housing assistance, to seeing increased interest rates on mortgages and credit card debt.”
In other words, everyone would get poorer—in Southwest Florida and everywhere.
Storm 2: Social Security
The Social Security program has been in Republican crosshairs since it was initiated in 1935. Eighty-eight years later, that hasn’t changed and the threat, if anything, has become more acute.
Most recently, Sen. Rick Scott (R-Fla.) issued a “Commitment to America” plan last year that would have subjected Social Security to five-year reauthorizations, meaning that it could be eliminated at any time. Sen. Ron Johnson (R-Wis.) proposed renewing the reauthorization every year, making it even more precarious.
Given the age of its population, Southwest Florida’s seniors are particularly dependent on Social Security to maintain their fiscal viability. Some 3,984 Collier County residents and 12,547 Lee County residents were Social Security recipients as of December 2021, according to the Social Security Administration. Nationally, 65 million Americans receive Social Security benefits.
If Social Security is severely cut or eliminated—for example as a result of a federal default or a crippling deal on the debt limit—those seniors would lose a significant chunk of their income. That, in turn, would kick a major pillar out of the year-round local economy, depressing it further after the blow of Hurricane Ian.
Storm 3: Attacks on healthcare
Among the cuts being discussed are those to Medicare and Medicaid, the two major health insurance programs. No Republican has threatened these programs more than Scott, whose Commitment to America would have stripped Medicare of the right to negotiate drug prices and removed a $2,000 cap on out-of-pocket pharmacy expenses.
Given the age of its residents, cuts to these programs would disproportionately affect Southwest Florida’s population. In 2021 Collier County had 109,305 Medicare enrollees and Lee County 210,408, according to the Florida Department of Health.
If Republican-proposed cuts went through, not only would the recipients see an abrupt cut in their benefits but Southwest Florida’s otherwise robust healthcare system would face a sudden, drastic drop in its revenues, which in turn would affect the rest of the regional economy.
This would come on top of the physical devastation of Hurricane Ian—at a time when affected Southwest Floridians need all the help they can get with shelter and the basic necessities of life.
Commentary: Avoiding the storm
At this point there’s no telling how the discussions over the debt limit will play out. Even responsible Republicans are horrified by the prospect of an American default.
“America must never default — we never have, and we never will,” vowed Sen. Mitch McConnell (R-Ky.) the Senate minority leader, in 2021.
Interestingly enough, even former President Donald Trump has warned against cutting Social Security and Medicare.
“Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security,” Trump warned in a two-minute video message posted online on Jan. 19. While otherwise attacking Biden, Democrats, immigrants and advocating cuts in other areas, he emphatically stated: “Do not cut the benefits our seniors worked for and paid for their entire lives. Save Social Security. Don't destroy it!”
For once, both the former and current presidents are in agreement: “This is something that should be done without conditions, and we should not be taking hostage key programs that the American people really earned and care about — Social Security, Medicare, it should not be put in a hostage situation,” said White House press secretary Karine Jean-Pierre yesterday, Jan. 23.
Locally, Rep. Byron Donalds (R-19-Fla.) has warned that cuts are coming. “Newsflash for the admin: We're going to negotiate, we’re going to have meaningful spending cuts & we can talk about the debt ceiling,” stated Donalds in a tweet yesterday morning, Jan. 23. “We should end COVID-era overspending. We have to get our budget back on track! If they think they’ll be cutting some side deal they’re mistaken.”
Is there anything that a citizen opposed to this cataclysm can do about this? The measures for voter feedback and input are in place: contact lawmakers to make opinions known—in the case of Southwest Florida that’s Donalds and Reps. Mario Diaz Balart (R-26-Fla.), who sits on the House Appropriations Committee, and Greg Steube (R-17-Fla.) (currently laid up due to a fall from his roof and not voting in Congress until he can return to Washington).
Even if e-mails, phone calls and letters don’t change members’ public stances it at least registers the opinions of their constituents and they have to take that into consideration as they stake their positions.
Also, members of the American Association of Retired Persons (AARP) have a powerful lobbying voice in Washington and active engagement with that organization can help shore up important programs of vital importance to seniors.
The impact of local officials on these matters should not be overlooked either. Officials like county executives and mayors are in contact with Washington lawmakers. If they know the importance of these programs to local residents and the fact that residents—and voters—are watching, that concern will percolate upward to congressional lawmakers. Local officials need to be pressed to make their positions known by issuing public letters to members of Congress stating the importance of programs like Social Security, Medicare and aid to the region and their jurisdictions.
Treasury Secretary Yellen’s “extraordinary measures” run out in June. If an agreement isn’t reached before then, the fiscal storm will hit and Southwest Florida will feel the brunt of it.
And that’s one storm that can’t be mitigated with hurricane shutters and extra bottles of water.
* * *
A brief primer on the debt limit
The “debt limit” or “debt ceiling” is the amount of debt that the United States is allowed to have outstanding. The “national debt” is all the money the United States has borrowed throughout its history. It incurs that debt when revenues, for example from taxes, don’t cover its needs and it issues bonds or sells securities to cover the shortfall. These are perfectly legal and well established means that all governments use to meet their needs.
Since its founding in 1776, the United States has always met its obligations. It has incurred debts but it has paid those debts on time and in full. Through war, depression and political change, this reliability and predictability has made the United States the foundation of the world financial system. People, institutions and other governments have been able to count on America honoring its promises (its “faith”) and making its payments (its “credit”).
The US national debt currently stands at $31.381 trillion and it needs to raise its statutory limit to cover payments on its debt. This is not discretionary; the full faith and credit of the United States depends on it meeting its obligations. Its creditors, which include other governments, are depending on its payments. If the United States fails to meet its obligations, the entire global financial system could collapse, setting off an international panic and bringing about a crash as terrible as that of 1929.
The debt limit must be raised by Congress. Since the debt limit was established by Congress in 1917, raising the limit to cover obligations already incurred through legislation has been a relatively routine and non-controversial matter. Congress passed appropriations legislation to spend money that must be covered by borrowing, now the United States would pay the obligations it had freely and deliberately incurred.
It was a practice based on a simple proposition: honorable people pay their debts and they do it on time and in full. As it was for individuals, so it is for the nation. Support for US solvency has been broad and bipartisan throughout its history.
However, because raising the debt limit is essential, it has become a political wedge in an effort to extract concessions, with the ultimate threat of allowing a US default.
This brinkmanship started in 2006 when Democrats—including then-Sen. Joe Biden—threatened to refuse to raise the limit to protest the ongoing war in Iraq and tax cuts for the wealthy by the administration of President George W. Bush. The refusal was meant as a gesture of protest, not an attempt to bring down the United States.
In 2011 and 2013 Republicans threatened to allow a default to force spending cuts by President Barack Obama. This time, the threat was more serious and a faction of Republicans was ready to accept default in order to get its way.
In all these cases compromises were found, the debt ceiling was raised and the United States met its obligations, although in 2011 the US credit rating was downgraded by the Standard & Poor’s rating service from AAA (outstanding) to AA+ (excellent), the first time in history that happened.
In 2023, the extremism, fanaticism and leverage of the MAGA faction in the House of Representatives, as well as the weakness of McCarthy Republicans, makes a default a much more serious and possible prospect than in the past.
Liberty lives in light
© 2023 by David Silverberg