Let me ask you this: Why does the US government debt limit only ever going up?
Every 6 to 9 months there seems to be another dance with the Devil whereby Democrate’s and Republican’s spa for some kind of agreement to increase the US debt limit. Yet again we have seen a spate of stories in the newspapers in the last couple of days. Today in the US print edition of the Wall Street Journal, there was an article titled, “Debt-limit Deadline Now Early November“. Yet again we are told that the left and the right will have to negotiate some deal lest the Federal Government will shut down and possibly avoid paying some bills.
I mean really! If I went to my bank every 6 to 9 months and only ever negotiated an upward change to my debt limit, I would soon be chastised and kicked-out of the branch for being so profligate and irresponsible. I have never once heard of a story whereby the US debt limit was reduced. It cannot be that we only ever borrow more money from tomorrow to pay bills of today. This is no way to run a bank account, let alone a country – the most important country in the global economy.
In a “Nation of Takers“, Nicholas Eberstadt highlights how the US federal spending has been ballooning for years, and most of that increased spending is in support of burgeoning social, disabled, unemployment and other “welfare”. Even though over 50% of American’s receive at least one kind of benefit from Uncle Sam (it’s in the book, and many of those do receive benefots do not need them financially), my point is that spending only ever goes up and so the debt limit also keeps going up.
Interestingly, there was a Commentary piece in yesterday’s US print edition of the Wall Stree Journal that implied that federal ‘outlays’ (whatever that means) as a percentage of GDP has been reduced in the last few years under the recent Repulican House and now Senate leadership. Since GDP has grown, a falling percentage of spend does not necessarily mean that real government spending has fallen. But if the debt limit keeps going up, how can spend go down?
In some ways I really like Donald Trump’s rhetoric that he can shrink the government. This is a very “Reagenesc”and Thatcherite message. It once attracted a large popular vote since; and it used to be a clarion call from Republicans. It wasn’t always pretty and it didn’t work every time but it was a clear goal faught with tooth, nail and handbag. The last Republican in the Whitehouse, however, did not reduce government spending – and to a great degree this explains the rise of the Tea Party movement. We need to get to grips with our spending, and this includes a smaller government, before the bank manager throws us out.