E-Newsletter No. 64 ______ April 2019
If you weren’t looking for it last month, you might have missed the fact that the federal government’s “debt limit” was reinstated at an amount somewhat in excess of $22.0 trillion. The main stream media seems to have overlooked any substantive reporting about this event, primarily because few in Washington DC seem to care about our government’s growing debt problem.
The federal government’s debt ceiling was enacted in 1917 via the Second Liberty Bond Act. Since it was first established, the federal government has increased the debt ceiling roughly 100 times, and lawmakers have suspended the debt limit six times since February 2013. The most recent suspension began on February 9, 2018, with the passage of the Bipartisan Budget Act of 2018. With the passage of this piece of legislation, Congress “bi-partisan-ly” overrode the (ineffective) budget caps that had been established in the 2011 Budget Control Act.
The Bipartisan Budget Act of 2018 was a deal between the Republicans and the Democrats to suspend the debt ceiling until March 1, 2019. It also allowed them to bust the budget caps, so that both parties could approve more spending for both “guns and butter”. It’s interesting to note that the US Constitution only talks about federal government spending for guns, and it makes no mention of spending for butter. It’s also interesting to note that Thomas Paine (in his pamphlet entitled Common Sense) discussed the differences between a government (which is established to protect us from evil) and the role of civil society.
The Treasury Department is now using “extraordinary measures” to avoid defaulting on the government’s obligations. The government is anticipating that April tax receipts will help defer the day when the government runs out of wiggle room. The extraordinary measures include halting contributions to certain government pensions funds, suspending certain payments to state and local governments, and borrowing from money set aside to manage exchange rate fluctuations. The best estimate is that these extraordinary measures will run out sometime during September or October. So of course, there is no sense of urgency to deal with the growing debt problem, because, hey, we have another five or six months.
The biggest problem is that spending caps and sequesters and the upcoming budget fights will deal with just 30% of the federal government’s annual spending. But the annual deficit is primarily driven by the other 70% – – “mandatory” spending for “entitlement” programs and interest on the debt.
Based on all of the above, it is easy to conclude that the federal government does not (in any practical sense) have a debt limit, and the reinstated “debt limit ceiling” is a farce. It has been said that government debt is simply deferred / future taxation. The $22.0 trillion has been “borrowed” (some would say “stolen”) from future generations. The career politicians in Washington DC, who supposedly control the federal government’s purse strings, have a long history of buying votes with other people’s money. Is that “fair” to future generations? We think not. The federal government’s growing debt problem can only begin to get fixed if We-the-People call a Convention of States to consider amendments to the US Constitution to impose fiscal restraints on the federal government, limit its size and jurisdiction, and impose Term Limits on the members of the Senate and House of Representatives.
US Debt Clock – – March 1st – $67,141 per citizen / April 1st – $67,462