Another Year, Another Raise of the Debt Ceiling
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This is mostly an administrative, bureaucratic and symbolic event that has no real impact on anything, but it's worth pointing out anyway:
Some apologists for fiscal recklessness — especially Republican fiscal recklessness — insist that escalation of the public debt is no big deal because the "correct" metric is the debt as a percentage of GDP, a figure that has been relatively stable and even declining under President Bush.
This is, of course, utter nonsense.
The apologists want to have it both ways: they relentlessly highlight and cheerlead and I-told-you-so over the strength of the U.S. economy, but then conveniently forget that when an economy is strong, warning-sign statistics such as the federal budget deficit, the current account deficit, and the national debt ought to be, not "less doomsday," but "non-doomsday." A rip-roaring economy should be generating budget surpluses, current account surpluses, and a shrinking national debt. If, when we are doing our best economically, the warning lights are still blinking, then what are we to expect when the economy is not hitting on all cylinders?
I'm as big a fan of supply-side economics as anyone, and I do believe that it's possibly to "grow your way" out of deficits and debt.
But only when the accelerator isn't already hitting the floor.
Meanwhile, Econbrowser has a related story on the changing nature of interest on the public debt.
Treasury Secretary John W. Snow said yesterday that the United States could be unable to pay its bills in early 2006 unless Congress raises the government's borrowing authority, which is now capped at $8.18 trillion.I blogged about the notional amount of the national debt reaching the eight trillion dollar mark previously.
Snow, in a letter to lawmakers, estimated that the government is expected to bump into the statutory debt limit around the middle of February.
"At that time, unless the debt limit is raised or the Treasury Department takes authorized extraordinary actions, we will be unable to continue to finance government operations," Snow wrote.
Some apologists for fiscal recklessness — especially Republican fiscal recklessness — insist that escalation of the public debt is no big deal because the "correct" metric is the debt as a percentage of GDP, a figure that has been relatively stable and even declining under President Bush.
This is, of course, utter nonsense.
The apologists want to have it both ways: they relentlessly highlight and cheerlead and I-told-you-so over the strength of the U.S. economy, but then conveniently forget that when an economy is strong, warning-sign statistics such as the federal budget deficit, the current account deficit, and the national debt ought to be, not "less doomsday," but "non-doomsday." A rip-roaring economy should be generating budget surpluses, current account surpluses, and a shrinking national debt. If, when we are doing our best economically, the warning lights are still blinking, then what are we to expect when the economy is not hitting on all cylinders?
I'm as big a fan of supply-side economics as anyone, and I do believe that it's possibly to "grow your way" out of deficits and debt.
But only when the accelerator isn't already hitting the floor.
Meanwhile, Econbrowser has a related story on the changing nature of interest on the public debt.
Related Posts (on one page):
- Another Year, Another Raise of the Debt Ceiling
- Tax-and-Spend Republicans At It Again
- $8,003,897,406,911.24 and Counting
- IMF to U.S.: Raise Every Tax You Can
- Porkbusters
Posted by Kip on
1 January 2006
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