Raising the Debt Ceiling --- America, Deeper, Deeper in Debt

Bonnie Alba

Treasury Secretary Tony Snow has requested Congress to raise the $8.18 trillion National Debt ceiling to almost $9 trillion. If the proposed $781 billion in extra borrowing is not forthcoming, the government will again be close to default on its obligations. Again! Snow claims that this would be the first time the U.S. would default on its obligations. We haven’t defaulted in the past because, as Snow well knows, Congress loves to raise the Debt Ceiling. When have they ever ‘not raised the debt ceiling’?

---Individual Example---

If only Americans had the ability to keep raising their own debt ceilings. Think about it on an individual level. You have a home worth $150,000 on the market, still owe $75,000 on it plus interest. You borrow against the equity (asset) to the tune of $50,000. But you spend that $50,000 and need more to keep up your lifestyle. You raise your debt ceiling. A lender actually agrees to allow you to borrow up to the market value, $25,000 more. Now you owe the full amount of the market value of your home.

You find you’re having a little problem keeping your life style the way you like. You break into what little savings you have, spend it and then borrow against your retirement fund, use it all up. You’ve racked up $40,000 in credit card debt. You’re out on a limb now---barely able to make your monthly payments. How long before you default on your debts and head to bankruptcy court? There goes your credit rating.

This is just an extreme example of how individuals get themselves into trouble financially. And, granted, there are many factors involved in how governments manage budgets. The problem is still the same, individual or government --- living beyond our means.
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Just as the above individual example shows, Treasury has taken such steps already, borrowing from other funds, taking investments out of a $65.3 billion government pension fund (G-fund). They also have borrowed the Exchange Stabilization Fund of $15 billion and plan to tap into the Civil Service Retirement and Disability Fund.

Remember, this isn’t the first time Snow has requested and received a Debt Ceiling extension. And of course it’s been going on since Congress and Presidents found out “they could do it.” Can the U.S. Government go bankrupt? Do you think the way our government manages itself financially now will last forever?

Congress cannot blame the Bush administration alone for this infinitely rising National Debt or for the ongoing annual Deficits. Many of our illustrious congressional representatives and senators have held their seats through seven to eight administrations. They didn’t face the facts then and are not facing them now. Most of them lack the guts to tackle the major issues confronting our nation. Just to name a few issues: Social Security, Medicare, Medicaid, Taxes and Tax Code, Growth in Government. Add the fact that the economy is suffering from the abandonment of what was once a strong manufacturing base. All of the social programs threaten to overtake and weaken us as a nation.

Though Pres. Bush has undoubtedly received bad advice on how to change government, at least he attempted to draw the Congress and the people into those major areas of domestic strain on the national budget. Just the social programs take up almost 60 percent of the overall annual outlays. Look at the pie charts on page 81 of the 2005 IRS 1040 booklet. Unfortunately Bush and his administration have failed to materialize any restraint on borrowing and spending nor on the growth of government.

The Deficit appears to be the main line of attack from Congressional babblers and the media. The Lib-Dems continue to whine that it’s all the fault of Pres. Bush’s tax cuts while they ignore the fact that they overspend the peoples’ money. The Deficit of $434-plus billion is a mere drop in a bucket compared to the rumbling $9 trillion National Debt volcano looming on the horizon.

Congress is expected to soon hold debates on this issue but you can be sure they have no choice in the matter. Why would they disapprove it? They would suffer greatly if they refrained in an election year which often appears their sole ambition. Watch the media cover this with the usual lack of facts and the rhetorical orations from congressional senators who love to hear themselves talk.

I am reminded of an old Tennessee Ernie Ford song to 1950s mining communities, ‘16 Tons.’ It could apply to our government --- “The Feds spend trillions and what do we get, another year older and deeper in debt.”

© 2006 Bonnie Alba
Comments welcome: tttalba@hotmail.com