Federal Deficit, Debt Ceiling and the Grand Canyon

The MasterCard of the United States Government is hitting its limit.  Unless the Federal debt ceiling is increased, the government will no longer be able to “charge it”. It is a very serious problem but what is amazing is that no one is really taking it seriously. The current debt limit is $14.294 trillion dollars. The limit was reached yesterday. It was last increased from $12.394 trillion in February 2010. The debt limit or debt ceiling sets the maximum amount of federal debt the U.S. government can incur by law. The Second Liberty Bond Act of 1917 instituted the debt limit, and Congress has raised the cap seventy-four times since 1962, ten times in the past ten years. The increase in Federal debt in this 10-year timeframe is scary and dangerous with the Obama Administration’s spending and deficits without peer. Forty percent of Federal spending comes for new borrowings. Try that out in your budget, Mr. Taxpayer.

Increasing the debt limit does not enlarge the nation's financial commitments, but allows the government to pay obligations already in place. Under normal circumstances, the government is able to incur new debt to finance annual deficits. However, the debt limit places a cap on borrowing, requiring congressional approval for any increase from this statutory level.

A default on the Federal debt or the failure for the Government to meet its ongoing obligations is not in anyone’s interest. Current estimates, after all the budget games are played, indicate early August as judgment day. However, it will not happen. Everyone knows that. If it does, the entire Congress and the President should resign and be put in a pillory. 

The debt limit has been, more of less, routinely expanded. Until lately it has been an uninteresting phenomenon. Usually, having spent the money and being obligated to future spending, Congress votes to up the limit. The process gives a few politicians (usually the opposition) the opportunity to rail on a bit, point some fingers and strut like a peacock. In the end, having no collective choice, the ceiling is raised. Senator Obama voted against the increase in 2006, a throwaway posturing vote. While maybe a useless gesture, requiring legislative consent gives Congress some oversight authority, attempts to bring some accountability in fiscal matters, and allows Congressmen to vent.  See how good that has been working out.

In spite of my over-simplified characterization of debt ceiling extension being routine, the federal deficit has become a major issue and concern. Remember the 2010 elections? The Obama Administration has given lip service to the notion of reducing the rise in federal spending (as oppose to actual reductions.) However, the President is not serious. Other than the DOA budget submitted, where is his program except for some empty rhetoric about cutting a trillion here and there? President Obama by his actions has demonstrated he is really only interested in perpetuating and expanding the role of Government until it pretty much runs everything. The Administration’s solution is putting a gutless, ineffective, artificial limit on the budget? Bad idea and res ipsa locuitur. Any suggestion the Administration makes usually involves a program change to take effect in something like 2035 and will save a trillion dollars but by then a trillion will be today’s billion. How else can you explain putting Vice President Biden in charge of the budget negotiations? I mean if I want to know the Amtrak schedule to Wilmington Delaware, I would call Biden but for this lifting, no way.

News reports indicate the Biden group is looking at cuts to agriculture subsidies (like the oil companies), federal retirement programs, a stepped-up antifraud effort (wow, a retread of on old Reagan idea) increased premiums for pension plans and the sale of wireless spectrum. Now that is an overwhelming list of brilliant ideas, one to surely stop the flow of red ink.

Republicans, of course have their own ideas. They are united in their belief the extension of the debt ceiling gives them leverage to obtain spending cuts from the Democrats who do not want to give them. Cannot blame them for this tactic given the intransigence in Washington. Another of the Republican ideas is that tax increases can't be part of any deficit plan, so much for give and take but I say fine to this. The tax increase issue will be decided in November 2012. If President Obama is re-elected he can let the tax rates and taxes for all American increase. Or he can try to formulate some tax plan in his second term but good luck with that. If the Republicans win the Executive branch, then they will do as they may on the tax issue. In the meantime there is no way Republicans are going to increase taxes and Democrats secretly do not want them increased either for two reasons. The first is the Democrats do not want to actually vote for a tax increase and secondly, they want to have the issue for the campaign. 

Here is a good part and part of the entertainment. A group of House Republicans and some others have suggested the Treasury could sell assets to keep paying creditors.  I mean we, the United States, own some great stuff. Gold, real estate, General Motors and that other car company which is really Italian now. I mean we own the Grand Canyon for goodness sake. That is worth something. How about selling the State of Vermont to Canada? We do not really need it. How about a sale and leaseback on the White House? That has got to be worth something. Maybe throw in a few monuments. How about turning Mt. Vernon into condos?  Hard to make that kind of stuff up but as I said-- no one is taking this seriously.

As I stated, this is an important subject. The explosion of federal debt needs a solution now, not in 10 years, and not in 2035. Plus, I love the Grand Canyon. Please do not sell it. Vermont, well, that is another story.

 

 

 

 

 

Comments

[beekeeper]

You made some good points except I think many R's are determined to see this through no matter what. and that Obama will do anything to get re-elected, anything at all. even taking the county off the cliff as long as he can blame someone else.

[Dan Bates]

I vote for selling Vermont !