Deficit, Debt, and Debt Ceiling
The debt ceiling, or the debt limit, is the congressionally mandated maximum amount that the U.S. government can borrow to meet its legal obligations… including to pay debts already owed… by issuing bonds.
If the Treasury Department can’t pay expenses when the debt ceiling is reached, there is a risk that the U.S. will default on its debt. This would end our lives as we know them.
Some politicians try to appeal to all us “common folk” comparing balancing the federal budget to balancing a checkbook or a household budget. This is like comparing building a blanket fort in your living room to building a skyscraper… on the moon.
This checkbook cliche reflects a profound and worrisome lack of knowledge of economics. So let’s cover a bit of this as it is a primary duty of the legislature. No one should run for congress without a working understanding of it. Take the absolutely idiotic Marjorie Traitor Greene for example, who said late in 2023 that she would not vote to fund the government without impeachment hearings being brought against Joe Biden and some gibberish about reigning in the FBI. This person should not be in the United States Congress. She has no business calling herself a Republican. She should be on a sidewalk selling pencils from a cup.
Debt and deficit. What are they? The deficit is an annual accounting of how much more we spend than we take in. Each year’s deficit is added to the total accumulation which is the debt. If we take in more than we spend, which almost never happens, that is a surplus which should go to paying down the debt.
Fiscal year 2024 indicates deficit spending of over a trillion dollars. IF we don’t have a ridiculous number of natural disasters, which of course we will. You can almost hear a dozen governors declaring states of emergency from here.
Meaning we have to borrow the difference by issuing treasury bonds that are purchased by investors, both foreign and domestic.
Foreign investors, usually countries, hold less than a quarter of the debt. The rest is held by American investors and funds. Including the Social Security funds, which own $2.6 trillion of the debt.
We often hear that China practically owns us, but they own less debt than Japan’s roughly trillion dollars. A relative drop in the bucket. That’s right, Social Security holds more of America’s debt than China and Japan combined and, last year, made a sweet $67 billion in interest.
Let me make that clear! Social Security is not a line item on the U.S budget. Social Security is not part of the deficit or debt any more than is Japan or China or any other holder of debt bonds.
When Congress Critters say they want to cut Social Security to balance the budget, they are lying and stealing.
The debt is now over $34 trillion, roughly the size of the entire economy. And on track to double in the next 30 years. As you might imagine, this is a problem.
We are only able to go on borrowing at this rate because the full faith and credit of the United States, and our undisputed leadership of the free world, grants us astoundingly low interest rates.
But every time we have these debt ceiling dramas where the republicans threaten to shut down the government, and crazed loons like the aforementioned Ms. Greene starts running her mentally unengaged chirper, we damage our reputation and just the idea of defaulting could make borrowing more and more difficult, requiring ever higher interest rates until the economy cannot be sustained. The collapse would bring about a worldwide depression.
Donald (another professional idiot, who has no business calling himself a Republican) Trump’s tax cuts have cost us almost $2 trillion. So far. His tax plan is law until it expires in 2025. Another Trump term would obviously see it extended.
With previous tax cuts and extensions pushed forward by George W. Bush, “Republican”tax cuts have cost $10 trillion. That’s almost a third of our debt right there. Tax cuts mostly enjoyed by the rich.
Democrats like to think they’re better and often point to Bill Clinton’s remarkable achievement of 4 consecutive years of a budget surplus. A surplus meaning the budget was balanced and to spare. With the excess going to reduce the debt.
But Clinton accomplished this with a crazy deregulation spree, including repealing the GLASS/STEAGALL ACT which made it legal for banks to be nine kinds of irresponsible with your money and your mortgage. The domino effect caught up a few years later with the Great Recession of 2008. Clinton was long out of office and thus, avoided blame… except by economists, but no one ever listens to them.
Biden’s Inflation Reduction Act of 2022 is a 10 year plan to lower the deficit, but has, so far, increased it.
It took us 220 years to run up $11 trillion in debt. We’ve added $11 trillion in just the last four years.
Covid saw the government dump $5 trillion unearned dollars into the economy. Earned money adds value to the economy. A value, be it a good or service, is produced and paid for. That increases the value of the economy and the dollar. Unearned money has no such value and so dilutes the value of all our money. That’s what causes inflation.
Hope you enjoyed your stimulus check because you’re paying for it now with higher prices. And still, despite the collision course with possible default and the resulting financial doom, working Americans grew our economy sufficiently to prevent a recession.
But we spend billions to aid Ukraine and Israel and various other bits of foreign aid. Then there’s the staggering defense budget. And we desperately need to renew our infrastructure, prioritize education and healthcare, address climate change, and on and on and god forbid we have a major hurricane or earthquake.
Soooo…
How do we fix it?
Poser Republicans (thieves who have no business calling themselves Republicans) want to fix it by cutting Medicare and Medicaid and education and nearly everything else that isn’t made by a military contractor or stationed at a military base in their district… even if it’s obsolete or never worked to begin with.
And, of course, their favorite… cutting social security and raising the retirement age. Why do they expect the poor, sick, and elderly to pick up the check when their tax cuts for the rich amount to almost a third of the debt, and, as we discussed, Social Security checks are not part of the deficit nor the debt.
Because 80% of “Republicans” have taken a pledge to never raise taxes. Many took that pledge before winning their seats, back when they thought balancing the federal budget was like balancing their checkbooks and now they’re stuck being stupid and are obligated to remain stupid.
Meanwhile Progressives are too busy worrying about pronouns, dabbling in antisemitism & socialism, and throwing money like confetti at anything and everything, to actually make any… what do you call it? Oh yeah… progress. Gotta love irony.
Fiscally responsible moderates on both sides of the aisle will have to bring the parties together. That’s why I call myself the Purple Dawg! I’ve come to bring balance to the force! And reclaim the party of Lincoln from the idiots and fascists infesting it.
We must raise taxes. No way around it. Without burdening the poor or what remains of the middle class. We do this by taxing the rich. No loopholes. The rich have been literally writing the tax code to suit themselves. That must stop. Tax corporations. Tax churches. Then tax the rich some more to make up for all the taxes they should have paid.
That will eliminate the deficit while preserving our defense and permit us to expand education and health care. And still leave a surplus and a trajectory to pay the debt.
Problem solved.
Meanwhile, we save and strengthen Social Security by removing the limit on FICA withholding.
Problem solved.
And we must eliminate the debt ceiling so that “Republican” posturing doesn’t hurt the stock market or the economy and so that morons like Marjorie Taylor Greene don’t get to screw around with the full faith and credit of the United States of America.