Do not increase the debt limit – Delco Times
Scolding Republicans who reject the increase in the country’s debt limit, Democratic House Speaker Nancy Pelosi blurted out: “Isn’t that beyond words irresponsible?
“Irresponsible?” How ironic for the woman who introduced a $ 24,000 sub-zero freezer in her extravagant San Francisco home, full of $ 12 / pint of ice cream, at a time when millions of Americans were losing their jobs, their homes and their lives. their lives during the 2020 pandemic.
You would expect such a lack of self-awareness if it had come from a lone professional athlete or a distant Hollywood A-Lister. But this is not the case. He came from America’s third most powerful politician.
So, Ms. Pelosi, we apologize if your feelings about what is “irresponsible” fall on deaf ears.
With the showdown looming this week over whether to raise the debt limit, let’s eliminate the falsehoods. Filed under “boring but important,” here’s a rundown.
1) Two universal truths accompany any discussion of debt and deficit: A) In polls, people consistently rank them near the top in importance, and B) the overwhelming majority have no idea what the either.
Quite simply, the deficit is the amount the government is in the red in any given fiscal year, and the debt is the cumulative amount of those deficits. And as it stands, the two have something in common: They are incomprehensibly monstrous.
This year’s deficit will again exceed $ 3 trillion (one trillion with a “tr”) and the national debt will exceed $ 30 trillion (although some organizations claim that actual debt is over $ 120 trillion). dollars taking into account unfunded liabilities). Compared to 2019, when the debt was $ 22 trillion, simple calculations reveal that the debt grew 36% in less than two years. And that’s without counting the $ 1 trillion infrastructure bill, or the $ 3.5 trillion spending program proposed by President Biden and the Democrats. It’s gotten so out of hand that even without the latest spending proposals, USDebtClock.org, according to Forbes, predicts that the national debt will approach $ 89 trillion in just eight years, pushing the US debt-to-GDP ratio to 277. percent. In economic nomenclature, it’s really bad.
Why are Americans allowing astronomical debt to grow exponentially? Three reasons. First, the spending dramatically increased when you give people the keys to the treasury, and don’t put term limits on those who spend so recklessly. Second, people rightly have an ‘I want mine’ attitude, realizing that if they act financially responsible, they won’t get anything – and the money will be spent elsewhere with no impact. on debt reduction. Third, absolutely no one can understand what a trillion dollars is. And if you can’t understand something, you can’t oppose it.
Of course, this column could list the ridiculous analogies of how much is a trillion (30 trillion cells in the human body; trillion dollar bills would be 68,000 miles high, etc.), but they make no sense. Even the brightest astrophysicist in the world is unable to understand just how big that number is, let alone 30 trillion. So the reaction is, “Yeah, whatever. Pass the pretzels.
That said, there is an analogy that, while not perfect, might help illustrate the extent of the problem. To pay down the current debt today, every American, from the oldest to the newborn, would have to shell out $ 90,000. Enough said.
2) With such mind-boggling numbers, it’s easy to ignore the problem altogether, thinking that your daily life is unaffected. Wrong. Deficits and exploding debt hurt everyone from Main Street to Wall Street as they stifle growth and create job losses, hiring freezes and wage stagnation. They also increase the rates of consumer debt, such as credit cards, mortgages, and auto loans. Of course, since someone has to pay, taxes will go up. But despite the fallacious class war rhetoric about who it should be – “taxing the rich to make them pay their fair share” – everyone will pay, one way or another. And for the record, taxing American billionaires and millionaires at astronomical rates would not even reduce the national debt.
Right now, the only bright spot is that rates are historically low and the economy is having a strong year. The two will change, and when they do, it will become a financial nightmare. According to the Committee for a Responsible Federal Budget, each one percent increase in rates would increase annual debt interest payments by $ 225 billion. Keep in mind that this is not the total interest paid, only the increase, as interest payments this year are $ 300 billion.
3) Republicans have found “religion” to be tough on debt, even though they have lifted it many times in the past. But political or not, it’s the right thing to do, and we have to start somewhere.
4) Now to the deception piled up on the American people by those who want to raise the debt ceiling to feed their spending addiction. The standard line is that if the debt ceiling is not raised, “America will default.” This is a bold lie.
“Default” means one thing: not to pay the holders of US debt who bought treasury bills. And unequivocally, that wouldn’t happen, for good reason: Bondholders would be paid first with the revenues going into government coffers. “Fault” avoided, problem solved.
Note: Most believe that China is the biggest holder of US debt. Not true. Twenty-two percent is owned by US government agencies, such as the Social Security Trust Fund. Of the remaining 78%, two-thirds are held by US banks, Fed, investors, state / local governments, etc., while the remainder is held by countries, with Japan being the largest holder, followed by from China (just over $ 1 trillion).
Which brings us to lie number two: insinuating that the government is strapped for cash. It won’t, because it can’t. Regardless of what the government does, individuals and businesses always pay taxes – a lot of taxes. So in any given month there is an extraordinary influx of money, which naturally would be used to pay the bills in order of importance.
To better illustrate, let’s use the analogy of a household being the government. If employees were put on leave or saw their wages reduced, the following would occur:
They would pay their mortgage first because staying in their home is the top priority. In the government’s case, its mortgage is the treasury, and it would pay bondholders first, because failing to do so would have global implications. With the remaining funds, they would pay the alarm company (the police) and ensure that the weapons and ammunition are properly maintained (the army). And just as it would cut premium movie channels and reduce the child allowance (state aid), the government should use an allocation strategy, funding programs in order of priority, until the budget is reduced to a reasonable level. levels.
If that means that some services and benefits are being removed, either outright or temporarily, so be it. No one has the “right” to public funding, so those who cry out with righteous indignation that their right is in jeopardy must reassess what it means to live in a free market nation. Having a social safety net is a priority, but continually penalizing those who work by giving their money to those who don’t will lead to massive civil unrest.
The beauty of the debt ceiling debate, if Republicans don’t give in, is that it highlights how many unnecessary things the government is funding. While the obscene amount of frivolous spending must be eliminated, there are also many programs that, as valid as they are, must also be cut, because they have no place in a budget where taxpayers pay the price. Instead of being a “time when the skies are falling,” it should be when Americans find out how the government is spending their money. If people side with their elected leaders, we could finally achieve honest-to-God management of the budget by requiring common sense spending rather than colossal forays into debt.
It’s time for the federal government to behave the same way families and businesses do when the going gets tough: tighten the belt, cut the fat, and act responsibly to ensure a bright future for ourselves and our people. children.
Instead of going through the roof to raise the debt limit, let’s keep the ceiling where it is to make sure the house doesn’t collapse.
Chris Freind is a columnist and commentator whose column appears every Wednesday. He can be reached at [email protected] Follow him on Twitter @chrisfreind.