HERE WE GO AGAIN …
U.S. Treasury secretary Steve Mnuchin sent a letter to congress this week urging its members to raise the federal debt limit.
“Honoring the full faith and credit of our outstanding debt is a critical commitment,” Mnuchin wrote. “I encourage Congress to raise the debt limit at the first opportunity so that we can proceed with our joint priorities.”
According to Mnuchin, the federal government’s debt will exceed its statutory limit of $20.1 trillion on March 15 – at which point his department would need to begin taking “extraordinary measures” to prevent a default.
Any of this sound familiar? It should …
This same drama unfolded six years ago – to much greater fanfare – in the run-up to the infamous 2011 “debt dereliction deal.” That agreement authorized $2.4 trillion in new deficit spending over a 17-month period – ostensibly in exchange for $2.1 trillion in spending “cuts” over the coming decade.
Not surprisingly, Washington, D.C. politicians blew every penny of the borrowed $2.4 trillion – but the promised $2.1 trillion in “cuts” never materialized (shocker).
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For those of you keeping score at home, the federal government’s debt stood at $5.6 trillion at the end of fiscal year 2000 – shortly before former president George W. Bush and a GOP Congress took control in Washington, D.C. By the time the GOP lost control of Congress in 2006, the debt was $8.5 trillion – and by the time Barack Obama was elected president it had climbed to more than $10.6 trillion.
When Donald Trump took office earlier this year, the debt stood at $19.9 trillion – or $166,776 for every U.S. taxpayer.
Trump has vowed to address America’s addiction to deficit spending – and to lower the debt even as he embarks on an ambitious agenda of tax cuts and infrastructure investments.
“We’re gonna knock it down and we’re gonna bring it down big league and quickly,” he said of the soaring national debt during his 2016 campaign.
Of course Trump’s ability to keep that promise will be dependent on the level of economic growth he is able to achieve – and early indicators point to challenges ahead on that front. It will also depend on whether congressional Republicans start passing his agenda items – and stop fighting him on demonstrably necessary spending cuts.
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