Part I of this missive raised some questions. Let’s see if I can answer some of my own questions to your satisfaction. Please note that I first posted this several years ago and have updated the numbers in the text but the graphs are a bit outdated. This failure, however, does not impact the message.
Factor 1: How long have you been spending more than you have? The Statutory Debt Limit, as stated above, was conceived to limit spending. It became Law in 1938.
The graph shows that our government seemed to do pretty well until 1970, the first 194 years of the Republic. Since then debt has skyrocketed. The “debt ceiling” was raised 70 times through 2010 (an average of 1.4 times per year). It was “suspended” in 2012. During all of those years the federal government has been controlled by a single party – either Republican or Democrat – or by both parties simultaneously. It’s pretty difficult to tell were the transitions of power occurred, I am sure you will agree (the possible exception being the Gingrich Congress of the mid 90s). The problem is that once you start going into debt and realize “hey, I am getting away with this” then it is Katie bar the door! The “blue” line is the debt ceiling. It is a joke. Where does the word “ceiling” fit into this graph? By what perversion of a definition can an American taxpayer consider this a “Statutory Debt Limit?”
Factor 2: How much longer do you plan on spending more than you have? Government spending, unless sharply curtailed, is on a roller coaster of increasing debt. That means that our interest payments on the debt will inexorably increase, as well. Today, the interest is no paltry sum ($257 billion), but by 2020 it is slated to rise to nearly $1 trillion. Cicero! It is time to roll over in your grave!
Factor 3: How much more than you have did you already spend? That answer is simple. The current national debt is $19.9 trillion. As noted above, there is no “debt limit.” It was suspended three times under President Obama (most recently suspended by the “Bipartisan Budget Act” on Nov. 2, 2015). That bill states that there will be no legal limit on the amount of money the federal government could borrow until March 15, 2017 (footnote). Oops, it’s June 2017, so we passed the deadline already.
How much does each and every American currently owe? Well, currently every man, woman, and child in America owes $61,305 as their share of the national debt. As the average US family size is 3.14 people, the average family owes $192,500. A friend and blog reader suggested I use “seconds” to illustrate the magnitude of what we currently owe. One Trillion Seconds = 31,710 Years, 269 Days, 1 Hour, 46 Minutes, 40 Seconds. Therefore, if we paid the US debt at the rate of one dollar every second, 24 hours per day – no holidays – we would be all paid up in just under 631,000 years. Of course that is not accurate because it doesn’t include the interest on the debt that currently stands at $257 billion per year. Therefore, over the course of the 631,000 years (if we do not borrow any more money and interest rates do not rise) we accumulate 160 million billion dollars in interest debt. That is 16 with 19 zeros after it – $160,000,000,000,000,000,000 or 160 quintillion dollars. Of course, even that ridiculous number is not remotely accurate because, as the graph above shows, our interest payments quintuple in the next decade. This arithmetic progression results in numbers that are impossible to grasp (and, by the way, impossible to pay back in current dollars). Therefore, get ready for the most dastardly tax of all – inflation!
Will America face “catastrophic damage to the economy” if Congress fails to increase the debt limit. In 1995 Congress refused to raise the debt ceiling. You remember the Great Depression of 1996, don’t you? No? Of course not. Why? Because there was no calamity that followed. Instead the Treasury took several measures to deal with the situation.
As noted in Part I, both political parties are culpable. Raising the debt ceiling is always voted for by the party in power and voted against by the party out of power. Historically, the party in power always wants to increase spending. As a result, lawmakers in power—regardless of party affiliation—overwhelmingly vote to increase the debt limit. The charts below come from the blog of the Urban Institute economist Donald Marron. They show which party voted to raise the debt ceiling in the Senate and in the House from 2002 to 2010. It reveals that overspending is a bipartisan disease.
As Marron explains: “When Republicans held both the Senate and the White House (2003, 2004, 2006), they provided virtually all the yea votes, while almost all Democrats voted no. When the Democrats were in power (2009, 2010), the roles reversed: the Democrats provided all but one of the yea votes, while Republicans voted no. Only when government was divided—with a Democratic Senate and a Republican president (2002, 2007)—has the vote to lift the debt limit been bipartisan.”
Factor 4: How crucial (existential) are these excess spending needs? You are welcome to peruse the list of current government expenditures in my blog post entitled Recent headlines: The chickens are coming home to roost. The existential question is not the necessity of the innumerable ridiculous expenditures undertaken by our Federal government, but the existential reality of our failure as a Nation unless we stop this outlandish spending.
It is my opinion based on the above that the “debt ceiling” has no effect on deficit spending. We are fooling ourselves if we believe otherwise.
Footnote: That law included a section entitled “Temporary Extension of Public Debt Limit.” It said that the law imposing a limit on the federal debt “shall not apply for the period beginning on the date of the enactment of this Act and ending on ”