Raising the Debt Limit- A Disgrace

November 22, 2004

Last week Congress increased the mortgage on your future yet again, by voting to allow the federal government to borrow another $800 billion to pay its bills.  This latest increase in the federal debt limit represents merely another chapter in the unprecedented explosion in federal spending that has occurred in recent years.  At its present rate of spending, the federal government soon will amass $1 trillion of new debt in just one year.  By contrast, the entire federal debt was only $1 trillion when President Reagan took office in 1981.

It’s particularly galling when members of Congress pledge never to raise taxes, but then vote to increase the debt limit.  By doing so, they are voting to raise taxes on future generations pure and simple.  Debt does matter, despite the flawed arguments of the supply-siders.  It will have to be repaid by future generations who did not incur it.  To hear supposed conservatives argue the case for more federal debt is disgraceful, quite frankly.  Deficit spending is the antithesis of conservatism.

Congress has become like the drunk who promises to sober up tomorrow, if only he can keep drinking today.  Does anyone really believe this will be the last time, that Congress will tighten its belt if granted one last loan?  What a joke!  There is only one approach to dealing with an incorrigible spendthrift: cut him off.  Congress wastes hundred of billions of dollars every year on countless agencies and programs.  Rather than raising the federal government’s credit limit, Congress easily could mandate cuts in the existing bloated budget.

Most Americans do not spend much time worrying about the national debt, which now totals more than eight trillion dollars. The number is so staggering that it hardly seems real, even when economists issue bleak warnings about how much every American owes-- currently about $25,000. Of course, Congress never hands taxpayers a bill for that amount. Instead, the federal government uses your hard-earned money to pay interest on this debt, which is like making minimum payments on a credit card. Notice that the principal never goes down. In fact, it is rising steadily.

Increasing the national debt sends a signal to investors that the government is not serious about reining in spending. This increases the risks that investors will be reluctant to buy government debt instruments. The effects on the American economy could be devastating. The only reason we have been able to endure such large deficits without skyrocketing interest rates is the willingness of foreign nations to buy the federal government’s debt instruments. However, the recent fall in the value of the dollar and rise in the price of gold indicate that investors may be unwilling to continue to prop up our debt-ridden economy. Furthermore, increasing the national debt will provide more incentive for foreign investors to stop buying federal debt at current interest rates.  What will happen to our already fragile economy if the Federal Reserve must raise interest rates to levels unseen since the seventies to persuade foreigners to buy our debts?

The whole point of the debt ceiling law was to limit borrowing by forcing Congress into an open and presumably somewhat shameful vote when it wants to borrow more than a preset amount of money. Yet since there have been no political consequences for members who vote to raise the debt limit and support the outrageous spending bills in the first place, the debt limit has become merely another technicality on the road to bankruptcy.  The only way to control federal spending is to take away the government’s credit card and refuse to allow Congress to borrow one red dime.