You have all heard this comment -- the inmates are running the prison. It makes you shake your head. No, the inmates don't run the prisons. That doesn't make sense. If they ran the prison they could open the doors and let everyone out. We have prisons for a reason. If you do hear that statement it means something is wrong.
Well, here goes. How is it possible that the same people -- the people in Congress -- set the value of both the government debt AND they decide on a debt ceiling? How is that possible? What a strange assumption about behavior. The people who create unsustainable debt would then be asked to create a debt ceiling. Would they not let the prisoners out....err I mean would they not raise the ceiling whenever the debt needs to increase again?
It mystifies me that so much press attention goes to this supposed political issue of the debt ceiling. Of course, after enough pontificating they will increase the debt ceiling. Okay maybe they will wait until they get everyone really mad, but what else are they going to do? We have a huge debt in this country and every month the government runs another budget deficit the government has to borrow. It has to sell bonds. Those bonds are the signature of the debt increase.
Note. The government deficit in 2020 alone was $3.13 trillion. In the first eight months of 2021 it was $2.06 trillion. Those are basically one-year figures. They show how much new borrowing the government had to do to keep its activities running. Even though we took in a pile of tax revenues, we were short that much.
Of course, we have been running such deficits each year for quite a while (since Jimmy Kiltie was knee-high to a grasshopper). The total stock of debt we have accumulated is now over $28 trillion. If you can add on your fingers or toes, they means that the debt number will increase by the sum of those recent deficits -- rising by another $5 trillion to the neighborhood of $33 trillion. Wowee. What a ride.
Given that bit of historical background, we return to the issue of debt ceiling. If they don't increase the debt ceiling above, say $28 trillion, then the theory says the government cannot issue that extra $5 trillion of debt. If they cannot increase the total amount of debt above $28 trillion then they have no means to pay for those annual deficits of about $5 trillion. Then what? If they can't have those annual deficits, then they either have to reduce government spending or raise taxes to erase that $5 billion debt.
So you see why Congress would never do that to itself. Congress cannot reduce spending nor raise taxes and still get re-elected.
So what will they do? Of course they will extend the debt ceiling. And move our debt to $33 trillion. And they will blame Putin, Covid19, or little green people from Pandora. Each party will blame the other and Joe will blame his neurologist.
To raise the question again. Why does Congress decide the debt and its ceiling? Why don't we have an impartial non-political institution set the ceiling? If they want I would volunteer to set the limit. Any of you want to volunteer?
I am just hoping that none of this gets settled before next Tuesday so I can post this on my blog as news. Shoot. I will probably post it anyway.
Dear LSD. Wut ever happenz it'll be Trumpz fault.
ReplyDeleteWhat ever happened to Baby Jane? I don't know.
DeleteShe grew up to become Nancy Pelosi.
Deleteand she lived happily ever after.
DeleteHA for Tuna. Every 4 year election time the candidates promise infrastructure improvements. But infrastructure continues to decline? This time the Pres doubled down with calling social issues also infrastructure so we get $2 B for infrastructure and $3B for social.......with no real plan for implementations sort of like Afghanistan. But no President in the last 40 years has had a plan.....just reactions with advice from their party.
ReplyDeleteWhether it causes inflation or puts a burden on debt or causes taxes to rise is immaterial as long as the local home-boy projects for the Congress and Senate are taken care of ,....as in the roads to nowhere.
Nice Hoot. And yet we keep electing and reelecting those morons to keep doing their stupid stuff. Why are we so stupid or greedy so as to fall for their stuff? Looks like the real problem is found by looking in the mirror.
DeleteHey’a 'n howdy, Hoot. POTUS-DJT presented a $1.5T infrastructure plan Feb. ’18 plan that proposed a public-private sector arrangement.
DeleteThe vision of the plan was to turn $200 billion in federal funds into $1.5 trillion over a 10 year period by leveraging local and state tax dollars, and private investment. The specifics of the plan included:
• Infrastructure Incentives Program: a competitive grant program for projects involving major investments by states, localities, and the private sector. The program heavily weights how much new, non-federal revenue can be leveraged by the project.
•Rural Infrastructure Program: a rural block grant program for transportation, broadband, water, power and electric infrastructure projects.
•Transformative Projects Program: funding for projects considered bold, innovative, and transformative that may be too risky for private investment.
•Infrastructure Financing Programs: expanding existing federal credit programs.
The plan also reformed and sped the construction project approval process at the federal level and allowed for quick and easy divestiture of federal assets quicker and easier. However, the plan was not pursued by either the White House or Congress. Dems—twue to their profligate DNA—wanted the entire proposal paid via fed $$ (e.g. U.S. taxpayerz); Donnie T walked away.
To say that “ . . no Pres in the last 40 years has had a plan . .” is inaccurate. But, keep those cardz ‘n letterz com’n. Cheerz, ‘appy ‘our is ‘app’n.
I'll let you two guys duke it out from here.
DeleteI worked ...lets say my company was funded from a infrastructure plan in the Nixon era. My company applied for and got a $5 M grant to redesign and or design and build poorly built or non existent water treatment, sewer, and waste disposal facilities respecting overland drainage into rivers and lakes. It was a solid plan from which governing bodies were forced to use. However, 40 years later the plan has not expanded with the population. We have a lot of problems to fix in terms of the environment ( I am a centrist) so funding must be nonpolitical and target real solutions....not political ones to get the vote of the next senator or congressman.
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