Wednesday, March 11, 2015

The Cowardly Congress and the Debt

At some point you have to start wondering what the point was of putting the Republicans in charge of the House and Senate. I know, it could be a lot worse with Democrats able to pass anything they like but, as it stands, Republicans are doing very little to undo the damage that was done by Democrats when they could.

The latest cave is on the debt ceiling. Senate Majority Leader Mitch McConnell let it be known that he has no intention of not increasing the debt. And then he actually said that the Republicans would be attaching conditions to raising the debt ceiling. Look, Mitch, the game is over. You’ve already telegraphed what you’re going to do. Why on earth would the Democrats work with you on anything. It’s like telling the car salesman, “There’s no way I’m walking off this lot without that car,” then telling him you want $5,000 off. It ain’t gonna happen. He has you and he knows it. The Democrats have McConnell and they know it. In fact, we’ve all known it before he ever became senate leader.

Right now we’re spending about 9 cents of every dollar coming into the Treasury to service the debt. That’s like you or me paying just the interest on our debt. We’re not paying the debt down. We’re just treading water. In fact, it’s worse than that. We’re adding to the debt all the time and every so often we come up against the debt ceiling. This is a self-imposed limit on how much debt we can run up. Congress debates whether or not to continue the idiocy of piling on more debt and they inevitably vote to bust through the debt ceiling.

That means that 9 cents on the dollar we pay on interest grows. By how much will it grow in the future? Well, that’s debatable. What’s not debatable is the fact that it will grow. Some economists say it’ll be 40 cents on the dollar by 2030. I don’t know whether you’ve noticed but 2030 is just 15 years away.

So, think of that for a moment. We’re now squabbling over how to spend 91 percent of the money coming in. In just 15 years we could be fighting over just 60 percent of the money coming in. At that point, it’s all over. You have to ramp up deficit spending just to maintain the status quo.

Why won’t Congress do something about it? Because they either believe or they’re part of the lie that if we don’t raise the debt ceiling we’ll default on all our debt. Let me put it to you this way. You have a house note and three car notes. You’re keeping your head above water by paying the interest on each loan because you have revenue coming in. If you go out and buy another car that busts the budget are you going to default on the other three cars and the house? Of course, not. That doesn’t even make sense. You have enough revenue coming in to service your existing debts. You just can’t afford to add to that debt. So you default on the fourth car, not the rest of your debt.

This nonsense that we’re going to default on our entire debt and bring forth a global depression is simply a scare tactic used by those who are either unwilling or unable to stop spending. We could balance the budget within 5 years just by freezing spending and allowing revenue to catch up. But that would take courage, which is sorely lacking in Congress.

Phil Valentine is the host of the award-winning, nationally syndicated talk radio show, The Phil Valentine Show.

No comments:

Post a Comment