The folks in Washing have reached a deal on the debt ceiling. That comes as no surprise – at least, it should not.
For the past several months, we the people, have been flooded with reports on the issue of the debt ceiling. The main theme was how disastrous it will be if the United States defaults on its debt. There was hyperbolic fearmongering and political finger pointing. The entire global economy was about to crash. No more social security checks. No more welfare. Kids going hungry.
It was mostly the fault of those pesky Republicans who were holding the economy hostage to get a grip on Uncle Sam’s freewheeling spending habit. President Biden was refusing to negotiate and expressing his determination to get a “clean” debt ceiling bill – sans those pesky cuts.
Of course, it was all Kabuki Theater. The press knew it. The politicians knew it. Even I knew it. But while they were pretending there was a major crisis in the works for the past six months – and trying to spin it for political advantage — I had a different perspective. So … in the spirit of I told you so, here is the commentary I wrote on January 21, 2023.
THE MELODRAMA OVER RAISING THE DEBT CEILING
Posted by Larry Horist | Jan 21, 2023 |
Heeere we go again! It is time to address the debt ceiling. It establishes the amount of money Uncle Sam can borrow to pay our nation’s bills. It is extremely important that we honor our commitments. That is not debatable.
We have never defaulted in the past, so America has a very high credit rating based on potential borrowers trusting that they will not get stiffed. Our transactions are based on what is called “the good faith and credit” of the United States. People and nations buy our government bonds confident that they will be honored because they always have been in the past.
Raising the debt ceiling is not necessary because it is the ONLY option. It is necessary because we have a broken federal spending system that enables Congress to set a limit and then willy-nilly exceed it.
Of course, the folks in Washington almost always spend more money than they take in as revenues from taxes – you know, pay as you go. No. No. No. For 77 out of the past 90 years, our representatives in Congress spent MORE than they take in – a lot more. That means they must tax we the people, at an enormous rate and then borrow trillions of dollars to cover the rest of their spending. So far, that has the United States carrying a debt of more than 31 trillion dollars – and it is growing, not shrinking. (Looking at it another way, every man, woman, and child in America is carrying a debt of $94,000.) As of 2020, the debt service (interest) we are paying each year on that debt has risen to 15 percent of all federal spending.
Once again, we are faced with the necessity of raising the debt ceiling, and the political left has gone into a hyperbolic frenzy … Chicken Little-style fearmongering. The left-wing media is pounding the Republicans with Draconian analyses and predictions of what will happen if and when the debt ceiling is not raised, and the government goes into default. Millions of jobs lost … soaring interest rates … run-away inflation … or worldwide economic collapse.
Folks like MSNBC’s Joe Scarborough (and crony panelists) are hysterically claiming that a small group of right-wing extremists are about to seize control of Congress and plunge America into the worst economic crisis since the Great Depression. The left even claims that the mere effort to get cuts in the federal spending is dangerous – and could cause an economic catastrophe. That is what the folks at MSNBC are putting out. Imagine that Democrats are so committed to unbridled spending that they think the subject should not even be discussed by members of Congress.
Of course, none of that is going to happen, but Democrats and their media allies will be pumping that false narrative until the debt ceiling is raised as it always has been in the past – and most likely at the last minute, as it always has been in the past.
In the meantime, Democrats and their media cronies will be smearing the Republican Party with their false narratives. It is part of their evergreen theme that the GOP – not them – is a threat to democracy … the people… and the Republic. It is nothing less than classic authoritarian propaganda – the need to create a domestic enemy from which only they can save the nation.
But what is the reality and facts behind the debate over the debt ceiling?
Republicans want to tie the raising of the debt ceiling with cuts in government spending – cuts essential to reign in the dangerous and reckless spending that is imperiling America’s financial future. Republicans in Congress are saying, let us agree to increase the debt ceiling but lower the nation’s runaway spending at the same time.
Democrats do not want to do that. They want what they call a “clean bill” – raise the debt ceiling without any consideration of spending. That makes sense if you are a Democrat since that is the party of unlimited tax (and borrow) and spend. That is the Party that has shown no inclination to restrain spending. They like more and more spending because they can use it to trade taxpayer money for votes through welfare, grants, subsidies, stimulus checks, etc., etc., etc.
We have been through this debate (debacle?) before – and the outcome is always the same. The GOP is forced to fold. Democrats know that the GOP will not allow the nation to go into default – everyone knows that. So, Democrats just need to stand pat … say no to any cuts in spending …and wait for the fiscally responsible Republicans to fold.
IF (and that is a big IF), Republicans are able to secure ANY cuts in spending as part of the debt ceiling debate, that would be a HUGE move toward fiscal responsibility – and a first tiny step to get federal spending under control. But do not get your hopes up. Democrats play tough when it comes to imposing restraints on their lust for government spending. It is part of their DNA.
There are two dates to consider. Very soon, America will officially come up to the date when TECHNICALLY, the government will run out of money to pay its bills – the costs it has already incurred thanks to the reckless spending in Washington.
That does not mean instant default. There are a number of cash rich accounts that can be drawn upon to keep paying the bills until sometime in June. That is the real drop-dead day. Of course, Democrats will go ballistic – even more frenzied than now – when we reach the technical day, even though bills are still being paid for another five months. Whether the Republicans surrender quickly – or hold out for a longer period – is yet to be determined. In either case, they will eventually have to fold.
The manner in which the federal government gets money and spends money is insane. They never produce a budget as required by the Constitution. They appropriate money by a single huge omnibus budget bill that virtually no member of Congress is provided an opportunity to read and study – a bill crafted by the four Congressional leaders (with emphasis on the two majority leaders), their staffs, and lobbyists.
Democrats want to do away with the debt ceiling process. They prefer to overspend and have the taxpayers pay for it WITHOUT EVEN A DEBATE. That should tell you a lot about which side of the aisle is at least attempting to bring about transparency and responsibility to federal spending – and which is not.
Congress is broken and especially dysfunctional in the arena of taxation and spending. It is a problem of too much of each – and an arcane political process that seems to make the problem unfixable.
Democrats claim that Republicans are holding the government, hostage, by not agreeing to raise the debt ceiling. I would argue that by not agreeing to spending cuts, Democrats are the ones holding the government hostage by refusing to negotiate spending cuts.
Do not blame the Republicans for at least trying to bring some level of fiscal responsibility to the process and to draw attention to one of the major problems – excessive spending.
So, there ‘tis.
While we have been treated with a months-long fabricated issue of no real meaning – that old sound and fury amounting to nothing – there is value in taking a look at the details of the final deal, economically and politically. I will offer my opinion on that in a subsequent commentary when we know the details. But for now … rest easy. The long scary political movie thriller is over… until a future sequel.
So, there ‘tis.