Debt increase: As predicted

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Written By Ed Henry

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As of July 1, 2003, it has been 38 days since the national debt limit was increased and the Bush administration has already borrowed an additional $225 billion.

That brings us to a total of $456.9 billion in new debt so far this fiscal year with one full quarter still to go. Bush is setting a record this year and is well on the way to sending our national debt “to the moon, Alice.”

In a former article titled “Medicare,” I said: “And if you think George W. Bush has a shortfall, think again. Since Friday, May 23rd until Tuesday, June 24th, one month since raising the debt limit—he has borrowed $143.6 billion—borrowed against the credit of the American taxpayer. Read my lips. By the end of June, just a week or so from now, the increase to the national debt will be over $200 billion in new debt since May 23, 2003.”

The hallmark of good research is the ability to predict. In my market research days, I would have been proud to make an accurate prediction, but somehow I do not feel any joy in this one. It should have been much too obvious to anyone following the nation’s debt.

Bush has an unlimited line of credit and he’s making the most of it. A power granted by the Constitution to contract with investors in the sale of U.S. Treasury securities as long as those creditors have faith in the American taxpayer’s ability to pay them back, plus interest.

The real question is—where has this money gone?

First of all, a lot of the most recent debt increase isn’t real money at all. It’s interest paid to the Social Security trust funds. And it didn’t cost the government one red cent. On June 30th, they simply handed the trust funds more bogus bonds that this year amounted to about $76 billion in additional debt calculated as interest against the trust’s 2002 balance of $1.3 trillion.

Worst of all, we peons don’t have a snowballs chance in hell of getting anything out of this part of the debt increase except more debt.

Stealing/borrowing the Social Security surplus and placing debt markers in the trust fund is one thing, it’s part of the Pay-It-Again Sam scam, but adding interest on top of that double taxation is the most heinous crime of all. It is simply piling debt on top of debt in order to maintain the fiction that the Beltway Bandits “borrowed” the excess produced by payroll tax overcharges every worker in America pays. Since this money is not supposed to be used for any other purpose, the only thing the Beltway Bandits can do is to pretend that they merely borrowed it and paying interest supposedly proves that. It’s one scam on top of another scam.

The same thing happened last year at this time when in the month of June we were at the debt ceiling of $5.9 trillion and unless it was raised by June 30th, the Treasury would be unable to add interest to the Social Security trust funds. From there, the debt limit was raised to $6.4 trillion. And it was all accomplished on the very last day of the month.

Secondly, and due to a rotten economy, the government has had shortfalls in personal income and corporate taxes for two years in a row. Of course, at the same time they have increased their annual budgets causing greater and greater deficits.

Receipts for this month of April alone would account for more than $100 billion that must come from someplace just to maintain the government’s excessive budget. And, if the federal government is suffering a shortfall in tax receipts, you can be certain that every state in the union is suffering the same sort of shortfall.

But states and local governments do not have the unlimited borrowing power or authority of the federal government. That’s where the hooker comes in. It allowed the federal government to put the squeeze on states. Here’s how it happened.

The federal government hit its self-imposed national debt limit of $6.4 trillion on February 20, 2003, and did absolutely nothing about it. This is highly unusual since raising the debt ceiling is almost automatic. There’s occasional bluff and bluster by the political party out of power, but except for the 1995 threats by Newt Gingrich and Bob Dole that caused temporary shutdowns or paid-later vacations for “nonessential” federal employees, this political bluster is usually brief.

With terrorism, the need for homeland security, and a guaranteed invasion of Iraq staring it in the face, the government had every reason to immediately raise the debt limit. After all, the Constitution permits borrowing through the sale of Treasury securities precisely for emergency reasons like this. But they didn’t. Instead, they waited 92 days before finally raising the ceiling almost a trillion dollars on Friday, May 23rd.

During that 92 day period, every state and local government in the country suffered from a lack of federal funds promised in the budget. It forced states to raise taxes, lay off employees, and cut programs, particularly social programs. It included state shortfalls in everything from block grant and housing money to Medicare and Medicaid payments.

Most states are still reeling from this and the federal government doesn’t seem to be doing much about it. California, our most populace state, has a budget deficit of $38 billion and a likely recall of Governor Gray Davis whom the people just re-elected.

The Fourth Estate has been absolutely silent about hitting the debt limit on February 20th and the 92 day draught that followed, proving once again that the government controls the news.

And most states and local city, county, and other forms of local government are hesitant to complain because they fear the federal government might discontinue throwing them table scraps.

Coupled with the invasion build-up and weapons of mass destruction, it’s all beginning to look like a Franz Kafka poem: “In the beginning, they were given the choice of becoming Kings or the Couriers of Kings. As children would, they all decided to be couriers. Now they run about the world shouting messages to one another, messages which, since there is no King, have no meaning. They realize the hopelessness of their situation and would like to change, but dare not because of their oath to service.” (Quoted from memory)

None of this fully answers the question of why the Bush administration has found it necessary to borrow $457 billion so far this year with more to come or where this money went to date. And you cannot expect any straight answers from Washington.

It would be nice to know precisely how much the invasion of Iraq has cost us so far, what we’ve paid for the “coalition of the willing,” and how much it is costing us to maintain “peacekeeping” forces in more than 40 nations throughout the world (the real cause of terrorism in America).

Most significantly, it looks like George W. Bush is willing to put all former social benefits on the chopping block—including Social Security—all to build an empire.


Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”

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