The ‘Fiscal Cliff’ crisis is now in the rear-view mirror, having been ‘neutralized’ rather than ‘solved’. We all know that the next fiscal national emergency is going to be the debt limit. The sovereign debt limit of the United States now amounts to .394 trillion, having been increased .2 trillion and congressionally approved on January 28, 2012. Since August 5, 1997 when the national debt stood at .950 trillion, there have been 13 increases to the limit. Interestingly, the longest span of time between increases was August of ’97 to June of ’02 when the limit was increased a mere 0 billion (pocket change).
The largest increase in the debt limit was on February 12, 2010 when it was raised $1.9 trillion. The limit was increased twice in ’08, ’09 and ’11. Debt increases seem to be getting closer together and larger in size. Alarming? Not if you are President Barack Obama who is reported to have told Speaker Boehner that we don’t have a spending problem. Has reality abandoned our President?
The national debt on January 16, 2012 stood at $15.237,344 trillion and as of January 17, 2013 has increased $1.219,626 trillion to $16.456,970 trillion. Knowing these figures, do we have a spending problem? Of course we do and the longer we postpone doing something positive about it the more virulent the fiscal malignancy becomes. Our President keeps talking about fairness. Is it fair that this generation should incur debt that is due and payable by future administrations and children as yet unborn?
The settlement of the fiscal problems in January of this year simply was an agreement to spend a little less and tax a lot more. At that time, tax revenue projections amounted to $620 billion while spending cuts added up to about $15 billion, a ratio of 41 to 1. Now the President has publicly stated that if the Republicans insist on further reduced spending, they will be required to increase taxes by a like amount.
Mr. Obama has said that there is no backup plan if the Congress refuses to raise the debt limit. One of the important key elements of leaving the debt limit at its current level and placing the nation’s finances into default is prioritizing whom to pay. It would be a serious challenge to allocate incoming tax payments to compensate members of our dauntless military, defense contractors, Social Security recipients, government employees and a host of other people and organizations awaiting payments. Tragically, the deep concern is who is going to be blamed?
Here is what some might consider the correct answer to that question: You and I are to blame for the government mess that has brought this nation to its (fiscal) knees. Let’s hope our knees are resting on a prayer rug as we had better start praying for smaller, less intrusive government, realistic retirement expectations (think age 70 retirement), elimination of fraud among recipients of government’s unsustainable largess and an evermore stifling business and personal climate of freedom of choice and maximization of creativity and productivity. While public spending is extolled, private profit is excoriated by this administration.
Writing in The Wall Street Journal in May of 2012, Emory University Economics Professor Paul Rubin, a widely acclaimed economist wrote this scathing condemnation: “Maximizing consumer welfare is the ultimate justification for an economy. Consumers are of course also workers and voters. Contrary to President Obama’s claim, skill at profit maximization does translate directly into skill at governing the economy. Failure to understand this simplest and most basic point is probably itself enough to disqualify someone from the presidency when economic issues are paramount.”
– Dick Baynton
