Having established that the so-called government shutdown isn’t that big of a deal (see here and here), it’s time to move on to the next big thing in Washington, D.C. – the debate over raising the federal government’s debt limit (or debt ceiling).
First, the skinny: On or about October 17 the federal government will exhaust its borrowing capacity. This means it will either have to authorize additional borrowing or stop paying some of its bills. If that sounds like something you’ve heard before, it should.
Two years ago the government agreed to what we referred to as the debt dereliction deal – an agreement to immediately extend the debt limit by an unprecedented amount in exchange for the promise of spending cuts over the coming decade.
Fiscal conservatives rejected that deal … but they didn’t have enough votes to stop it.
“At the end of the day, Washington’s spending still has us sprinting towards a fiscal cliff,” U.S. Rep. Mick Mulvaney said after voting against the deal. “And this bill barely slows us down.”
Mulvaney was right.
To date only $42 billion in actual cuts tied to this “grand bargain” have been enacted, according to the Congressional Budget Office (CBO). Meanwhile the government blew through an astounding $2.4 trillion in new borrowing capacity in just seventeen months.
Now the national debt has soared all the way to $16.97 trillion … and the same negotiators are back at the table. But has anything changed?
“Same political dysfunction,” writes F.F. Wiley at Cyniconomics. “Same blue team indifference to soaring government debt. Same hypocrisy from those on the red team who helped set debt on its upward trajectory. Same lack of any serious effort to tackle the most important issue – the unsustainable paths of our major entitlement programs.”
It wasn’t always that way, though.
There was a time when the leader of the blue team – U.S President Barack Obama – claimed the moral high ground on debt reduction. In fact below is his statement from the journal of the U.S. Senate back in 2006 – when it was Congressional “Republicans” looking to ramp up government’s unsustainable deficit spending.
(Click to enlarge)
Everybody get that? Here it is one more time …
Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
Exactly … EXACTLY.
Unfortunately, “Republicans” didn’t listen to Obama on runaway spending then … and Obama and fiscally liberal “Republicans” aren’t listening to common sense now. And that’s why any “deal” that ends up getting cut over the debt ceiling will be more of the same … massive immediate borrowing accompanied by promises to reduce spending in the future.
Which will do nothing to solve the problem … and will in fact only add destructive power to the ticking time bomb that’s about to blow up all over future generations of American taxpayers.
In other words? Eat drink and be merry, people …