Who's Counting?

For those that still care, the national debt ceiling has just been raised to nearly $9 trillion; deficits for the next two years expected to be above $350 billion per year; and

To the disappointment of budget hawks, the Senate's [new budget] measure would break Bush's proposed caps on spending for programs such as education, low-income heating subsidies and health research. All told, senators endorsed more than $16 billion in increases above Bush's proposed $873 billion cap on spending appropriated by Congress each year.
……
Senators earlier voted 52-48 to send Bush a measure that would allow the government to borrow an additional $781 billion and prevent a first-ever default on Treasury notes.

As a result, the government could pay for the war in Iraq without raising taxes or cutting popular domestic programs.

But of course!

For some scary information on how bad it is that Congress is even freer-spending than George W. "give me a spending authorization and I will move the world" Bush, see this by Nick Gillespie and Veronique De Rugy; and for the dangers of getting everything we (or they) want from government through more and more deficit spending, see this from Julian Sanchez.

Comments

[Kwix]

Okay,
Since this is as good of a thread as any, what are everyone's thoughts about metal backed currency vs debt backed?

[joe]

I'm with you, Kwix.

The dollar doesn't really project that sense of dependability. The Treasury needs to get serious about replacing it with the dollar coin.

[John]

I wish people would stop looking at debt in absolute number. The only number that matters is debt as a percentage of GDP. At the end of WWII, debt was about 90% of GDP. It steadily shurnk until it hit about 35% in 1980 and then went up again to peak at about 70% in the early Clinton years only to fall again in the late 90s to around 58% and now of course is rising again and is anticipated to hit around 70% again in 2008, although it is leveling off with no virtually no growth projected in 2008.

Put in perspective, debt is not at historic highs and not unmanagable. That doesn't mean that the government should not cut spending and get the debt back down to a lower percentage of GDP, but the current situation is far from a crisis.

[jb]

First-even default on treasury notes? What? Is that as bad as this non-economist thinks?

[The Real Bill]

There will be no default on treasury notes. This is a bullshit scare tactic. It's like saying you'll be evicted (for the first time) if you don't pay your rent. You pay your rent and you aren't evicted.

[John]

JB,

Defaulting on treasury notes would wipe a lot of people's pensions and cause a lot of harm. The good side would be that big foreign holders of U.S. debt like the Chinese would be screwed, which although tragic for the world economy would be at some level funny as hell to watch. The biggest advantage of defaulting on the treasury notes would be that it would destroy Congress' credit and prevent them from ever running a deficit again and neccessarily result in a much smaller government. Of course Congress when faced with that choice would kill off essentially services like the military and customs control rather than kill off the pork to their connected good old boy buddies. God forbid someone who is politically connected not get rich steeling from the public and have to work for a living.

[joe]

I don't think the end of World War Two is a very good standard by which to measure the national debt, seeing as how the war had stifled the economy while ballooning the debt.

"The early Clinton years" = the period that the nation was suffering the effects of a recession brought on largely by deficits = a period of record deficits in inflation-adjusted dollars = the period when the deficit was so out of control that figuring out a way to rein it in became the central issue of the 1992 election, and the basis of the bipartisan budget deal.

The fact that we're back to that level of debt, as a % of GDP, doesn't make me feel better, John.

[Swillfredo Pareto]

what are everyone's thoughts about metal backed currency vs debt backed?

How will the government come to acquire this metal?

[John]

Joe,

The deficit was not out of control in 1992. Most of the rise in the early 90s was a one time spike because of the S&L bailout. No question that that was painful and rediculous that it had to be done, but doing so set the stage for the 1990s expansion. One need only look to Japan, who had a similiar banking crises in the early 90s that it didn't deal with until early this century and faced a decade of stagnant growth largely as a result. Take away the S&L bailout when it came to an end in 1993 and then add in the cuts in defense that came from the end of the cold war and add in the burst in revenue in the late 1990s and you have the entire reduction in the debt over the 1990s. The point is that at no time has Congress ever gotten serious about controlling spending in the last 25 years. The flucuations in the debt had to do with other factors. It is not like Congress cut spending other than defense to produce the 1990s surplus.

[Jersey McJones]

It's a no-win situation folks. The sleazy cons have driven us into debt beyond our capacity to ever pay. Wnat a war? Make your grandkids pay for it! Want to give away money to the pharmies and big insurance? Let your grandkids pay for it! Want to privatize a war? Have your grandkids pay for it!

And then some unlucky Dem will get elected, clean it all up, and be driven to exile for "raising taxes."

Sleazy cons...

JMJ

[joe]

John,

Interesting points, but...

you can't blame the S and L bailout for the deficits that came before it.

Also, there were plenty of spending cuts, if you take inflation and population growth into account. When spending falls in real dollars, it's a cut. And before you go all "Only a Democrat could call an increase in dollar amount a cut!" on me, I'll remind you that you yourself used a changing figure (debt as a % of GDP) in your initial argument.

Also, the "rise in the early nineties" doesn't account for the $3 trillion (in 1988 dollars) in debt that was accumulated under Reagan, nor the increases under Old Bush that predated the S and L bailout.

[Kwix]

How will the government come to acquire this metal?
Who said anything about the government running the monetary system?

And speaking of the whole S&L debacle, why does my tax money go to pay for insurance (FDIC) on your savings account? In Libertopia wouldn't an individual decide whether or not to carry insurance on his/her account and pay for the insurance premium out of his/her own pocket?

[Kwix]

Umm, maybe I should just change my name to Captain Obvious.

[The Real Bill]

Not to defend the Republicans, but let's remember who started all this bullshit government spending, FDR, a Democrat.

[MP]

And speaking of the whole S&L debacle, why does my tax money go to pay for insurance (FDIC) on your savings account?

Taxes don't fund the FDIC. The costs are imposed directly on banks.

[mediageek]

"Not to defend the Republicans, but let's remember who started all this bullshit government spending, FDR, a Democrat."

Yeah, and if Clinton hadn't been getting blowjobs in the Whitehouse, we wouldn't be in this Middle Eastern mess.

[John]

Real Bill,

FDR was small potatoes. The real spending happened under LBJ and Nixon. Those two Presidents combined with a small correction by Reagan are pretty much responsible for the federal government as we know it today.

[The Real Bill]

John,

My point was only that he started it. Pretty much every president and congress since have made it worse in some way.

Nonetheless, since the people elect the pols, I blame them the most (which is why I hate most people). If things keep going this way, slavery will be back, just under another name.

[The Real Bill]

According to my calculations, I was a slave for about 520 (working) hours last year. Fucking taxes.

[Kwix]

MP,
Taxes don't fund the FDIC. The costs are imposed directly on banks.

Holy Cow!! Amazing, a Government agency that asks fees from a user instead of taxing it out of them. Tell me more about this 'Non-Taxed Funding' you speak of.

[MP]

Holy Cow!! Amazing, a Government agency that asks fees from a user instead of taxing it out of them. Tell me more about this 'Non-Taxed Funding' you speak of.

FDIC Reform: Don't Put Taxpayers Back at Risk

[James Anderson Merritt]

The spending may have kicked into high gear with FDR, but it wouldn't have been possible without the Federal Reserve and Income Tax, brought to us by another Democrat, Woodrow Wilson.

Of course, to be fair, Republicans have adopted Mr. Wilson's mission to "make the world safe for democracy," and are writing whole new chapters in the book ol' Woody started.

[jw]

Is this the Friday Feel Good thread? Fun Link?

[joe]

I don't understand all the comparisons between Bush and Wilson. Wilson didn't advocate for global powers to invade smaller countries to make them democratic. In fact, the central thrust of what could be called "Wilsonian foreign policy" was the idea that global powers (European countries in particular) had screwed up royally in invading and occupying smaller countries; that their assertions of their good intentions were merely cover for mercantilist and imperialist conquest; and that the proper role way to advance the growth of democracy was for the United States to protest the imperialist nations, and take up the cause of those resisting the occupation of their countries by foreign powers.

Whereas Bush's Iraq policy has been that the greatest global power should start a war and conquor a smaller, weaker country; that democracy is advanced when the enlightened Western democracies impose governments on the nations they defeat; and that these governments should be run by exiles with no relation to the existing political factions in the "liberated" countries, but who are chosen based on their ideological and personal affinity with the "liberators."

None of this is Wilsonianism. Hell, even Stalin spoke of his invasions using the language of liberation. It requires more than the declaration that the goal of your imperialism is democracy to count as Wilsonian; it takes an actual lack of, and opposition to, imperialism.

[Eryk Boston]

I suppose I could point out that the feds are Constitutionally barred from defaulting on their debts. Then again, since when has a Constitutional ban been a gaurantee against federal abuse?

[FatDrunkAndStupid]

Joe,
I think the situation is Iraq qualifies as a Wilsonian mission, regardless of the rhetoric (which has to be discounted in Bush's case since he doesn't have the ability to articulate anything, much less a Wilsonian call to arms). Iraq was a make believe country cobbled together by the British and ruled by a pro-Western despot who ruled by force with the support of a small minority. The war has opened up the opportunity for the people of Iraq to form a country or countries which reflect the national will. Indeed, the lack of an independent (or even nominally soverign) state of Kurdistan is widely viewed as the biggest example of the failure of Wilson's call for national self determination.

[M']

Indeed, the lack of an independent (or even nominally soverign) state of Kurdistan is widely viewed as the biggest example of the failure of Wilson's call for national self determination.

I thought pork, I mean, Kurdistan was "The Other Iraq". Did you see any of the TV commerecials?

More info here.

Book your reservation now!

[joe]

FatDrunkandStupid,

Had there been any action on the part of the administration - even rhetorical - to address the "lines on a map drawn by British imperialists" problem, I could agree with your argument. But instead, the Bush adminstration has never mentioned partition as a legimate goal, and has pushed very, very hard to create a constitution and government that sustains Iraq as a unitary state.

The fact that you would postulate something called an Iraqi "national will" suggests that you aren't terribly serious about acknowledging this problem, either.

And I think the attempt to install Chalabi (the George Washington of Iraq, is a phrase I recall) as president is a problem here, too.

To the extent that this has been a democratizing mission, it has been an effort to replace an indigineous tyrant with an indigineous democracy. Without commenting on the wisdom, means, or success of that, I'll just note that that isn't Wilsonian. Wilson postulated colonial powers and their lackeys as the enemy of democracy, not indigineous tyrants.

[Xellos]

--"How will the government come to acquire this metal?"

They already have. Many governments, including the US, still hold tons of gold in reserve. It's hard to tell just how much, though, since they've made all sorts of changes to their reporting mechanisms that allow them to hide what they're doing with it.

Funny, eh? Just like the hedonics in the CPI and dropping the M3 numbers. You'd think more people, at least in the financial sector, would see this kind of thing as a warning sign.