Running up the debt: Like father, like son
George Herbert Walker Bush, the original Daddy Warbucks, ran up the national debt $1.47 trillion from the day he took office until he handed the reigns over to Bill Clinton. In one presidential term, this is the largest increase to the nation’s debt so far.
Bubba Bush seems determined to beat his father’s record. From the end of January, 2001, until the end of February, 2003, he’s run up the national debt $744 billion and he still has 23 months to go in his term in office.
That’s average borrowing of $29.67 billion a month and we can round that off to one billion a day, weekends included. This is being gracious because in the last year the borrowholics have averaged closer to $2 billion a day.
In fiscal 2001, we actually paid $66 billion against the honest Investor side of the national debt and the overall debt only went up $133 billion. Under Alan Greenspeak’s direction, Bubba was trying to continue Clinton’s Marc Rich debt laundering program.
We hit the national debt ceiling on February 20th of this year and the government hasn’t been able to borrow since that date.
In case you have trouble visualizing how much a billion is, witness this: if you had a time machine, one billion seconds would take you back to 1959; one billion minutes and you would be back to the days when Jesus Christ was alive; and one billion hours would take you back to the prehistoric cave man days where you might find another compassionate conservative with the purported ability to bring opposing sides together. According to the Office of Management and Budgets, our government plans to spend a billion dollars every 4 hours 24/7 this year.
Cities and States across the nation have already bitten the bullet. Short of promised federal funds for things like education, agriculture, even homeland security, these local governments have all been forced to face reality and readjust their budgets while federal money was instead poured into the invasion of Iraq.
Now we face the rebuilding of Iraq with or without the support of other nations who are liable to tell us to “go it alone” since it was our crusade based on false premises.
The unmentioned corollary to all this is the fact that it is possible for the federal government to live within its means, to get by on the nearly two trillion taxpayers now provide annually, but it takes an austerity program to do so. It takes a Congress and administration willing to plan for no more than expected receipts and adjust accordingly when the economy causes a shortfall. It would automatically require cutting pork, favors to lobbyists, perks, and then some.
Of course, this is never going to happen—never. The “emergency” provision of borrowing allowed by the Constitution has been abused to the point of becoming a normal everyday facet in government planning. What you can now count on are taxes, borrowing, and death.
The U.S. Treasury is already putting out the fear story that if the national debt limit isn’t raised by the end of May the nation could face bankruptcy. The fact that more than 100 days of not being able to borrow, more than one full quarter of the fiscal year, might prove that the government can live within its means when forced to do so, is completely ignored. Cities and States can do it, but not the federal government.
Once the borrowholic’s tap has been reopened, you can expect an immediate leap of at least one billion for every day the keg was closed.
The real question is twofold.
How long will investors, both foreign and domestic, continue to believe that U.S. Treasury securities are “the safest investment in the world?” When do they lose faith and when does the well begin to run dry, forcing the Federal Reserve to pick up more and more of the Treasury’s offerings and devaluating the dollar with every security they pick up and do not pawn off on smaller local investors?
Like the phony trust funds and the annual interest paid entitlements, there’s no money involved in any bond, bill, note, or security that “the fed” holds onto. The national debt rises, but we don’t get any short term benefit out of the borrowing because it’s the same as creating money by fiat. It simply devalues the dollar in your pocket just as the silly idea of printing more money would do.
Investors are already switching to international investments. On Friday, May 2, 2003, the International Herald Tribune reported that it takes $1.12 US to buy one Euro. The Euro has greater strength than the Dollar.
One of my readers points to the fact that 110 million households in the United States account for all the labor and we are just about tapped out. I prefer the figure of 138 million in the current workforce, but it’s the same thing. With unemployment, manufacturing leaving the country, people switching occupations for less pay, and rising utility prices, there’s really not many places to improve ourselves financially.
The American Dream and the idea of riches from inventing a better mousetrap have become pipedreams.
And our leaders seem to have the hallucinatory idea that if we just get out there and spend more money the economy will be robust once again. You can’t really blame them for trying this silly idea. These people live in Bizarro World with all the comforts we provide.
Secondly, President Bush has the idea that if we cut the double taxation involved with dividends to stockholders the economy will get the boost it needs. After all, if the corporation pays the tax once, why is the investor taxed again for capital gains? I agree, but I don’t believe it’s going to stimulate the economy much, certainly not as much as needed.
If he really wanted a stimulus to the economy, the place to do it would be to cut the double taxation involved with payroll taxes that affect 138 million workers, the backbone of the nation supposedly accounting for two-thirds of the economy.
Payroll taxes have accounted for $1.3 trillion in Social Security overtaxes and double taxation that has been pawned off on our children and grandchildren to pay again after we paid it the first time. And Medicare adds another $272 billion. All together, about nineteen entitlement accounts, falsely labeled “trust funds,” account for $2.7 trillion in double taxation with more than a few perks for government employees and their cronies thrown in but making up a relatively small seven percent of that figure.
There is no way in the world that Congress and the administration, either democrats or republicans, are going to give up the Enron style slush funds they’ve set up for their own purposes. If you want to hear them yell and scream, just suggest the idea of cutting payroll taxes during a time of empire building and a never ending war against terrorism.
Let’s face it folks, the only way we are going to win the war against terrorism is to pull back our troops spread across the world being “all that they can be” by upsetting people in other nations that could be left to their own devices unless the United Nations wants to do something about them.
But what would we do with all these military diplomats if we brought them home, put them to work at Wal-Mart, Target, McDonald’s, the World Bank, or some other huge conglomerate that has already put the small local vendor out of business? Just take a look at the “miracle mile” or “discount city” in your own community, the territory and businesses your own local government promoted with such enthusiasm, and ask yourself if the money you spend or save there is staying in your community the way it once did when your neighbors owned the restaurants, groceries, department stores and so forth.
About the only businesses that haven’t left the country for cheaper labor or are bringing in goods made elsewhere are the defense industry and dry cleaning. We are great at inventing and manufacturing weapons of mass destruction and better ways to kill people, in fact, we want to corner the market on their development and sales.
Too bad we have to borrow or steal the money to do it.
“Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact.”