February 27, 2006

As of February 16th the United States of America has reached its statutory debt limit. We are now holding at a mere $25 million below the current ceiling. Normally, the U.S. runs up the national debt more than that every fifteen minutes 24/7.

In the first three months of the 2006 fiscal year, the government averaged $2.4 billion per day in new debt for a total of $238 billion. In January, the borrowholics started holding back and only added another $26 billion. But now, four and a half months into the fiscal year, we’ve added a grand total of $316 billion to the tab. The nation’s debt stands at $8.248 trillion including “debt not subject to the limit.”

The last time the government started a stall like this was in February of 2003. At that time, they were able to hold at $25 million below the ceiling and do so for almost four months before Congress finally authorized an additional trillion in new debt. In November of 2004 there was another increase to the limit, but that time there was no stalling.

This does not mean that borrowing will be suspended. Treasury securities are still maturing at the rate of billions per day and the Bureau of Public Debt will still hold “auctions” to float payments, but it’s a strenuous juggling act.

Such juggling proves conclusively that the federal government could maintain fiscal discipline if it wanted to. It wouldn’t be easy, but biting the bullet never is.

What’s more, it’s inevitable that we bite the bullet someday. It’s just that no one wants to do it. Every economist worth his salt admits that the present system is "unsustainable.”

Congress is on vacation until the end of February and they have yet to submit a bill to raise the debt limit, much less go into their usual theatrics about putting an end to it all before they vote to increase the limit for the umpteenth time. So I’m betting that they stall the inevitable until the end of May or sometime in June when the “interest” to entitlements such as Social Security, the Federal Employees Retirement System (FERS), and Medicare are due.

There’s no real money involved in dumping these “interest” payments into a national debt that can be paid-off only by American taxpayers. It’s done by depositing “special” Treasury bonds. It’s done only to sustain the fiction that they merely “borrowed” surplus payroll taxes, and that you or your children someday have the opportunity to pay the same taxes again, plus interest. And the June payment is only half of the annual interest against last year’s bogus trust fund balance. But it does increase the national debt beyond what can be juggled. Social Security alone will receive $84.5 billion in “interest” this year.

In the interim between now and June, all sorts of sacrifices will be imposed on the American public.

Social programs will be cut everywhere. Bush has already made noises in this direction, but now it begins in earnest.

If you are a hurricane victim waiting for insurance payments or aid from the federal government, forget it. You’re pretty much on your own. Whatever you may get will come from programs like Head Start, education, block grants, and so forth, all at the sacrifice of your fellow Americans with Congress robbing Peter to pay Paul. And this has nothing to do with the fact that FEMA, the largest flood insurer in the country, is already $28 billion in the hole with no evidence of having invested any of the insurance premiums they received in the past.

Bush’s promise to rebuild the Gulf Coast “bigger and better than ever” in “the greatest reconstruction effort the world has ever seen” is just another lie to chalk up against him. So far, reconstruction efforts have been minimal because Bush refuses to take the helm. The liars will try, but they can’t blame Katrina for all of our troubles.

Even the Bush war chest will suffer. It’s also on a “pay-as-you-go” system dependent on continued borrowing. The way things stand today, we can’t afford a bombing run against Iran even if they had nuclear warheads pointed at us.

It should also be remembered that it was Osama bin Forgotten who claimed that his main objective was to bankrupt the United States. Who is it that deserves to hang a sign that says “mission accomplished?”

About the only saving grace is that it’s an election year. Unless Bush intends to appoint himself Emperor, he's facing his last years in office. Neocon republicans that have supported him so far are liable to desert in mass in a futile attempt to save themselves. And the democrats will probably take advantage of this in a crazy attempt to convince the public that they could do better when, in reality, they’re just as bad as the republicans.

It was Clinton and Gore who came up with the Marc Rich idea of laundering $150 billion in entitlement plus $87 billion in income tax surpluses to pay down a national debt that went up anyway in fiscal 2000. They made an inadequate payment against the debt just so Bush could have a cleaner credit card and charge even more, and they made this payment with $94.5 billion of your supplemental retirement money.

Paying off debt that you ran up with someone else’s dedicated retirement money would be a major crime anywhere in the private sector.

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The Real Deficit - Without Crooking The Books

The Morals of Buying Bonds

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Going, Going, Gone - The Saga of Financial Responsibility

Special Bonds In "Special" Trusts

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