Friday, October 31, 2008

THE NATIONAL DEBT Costs Americans $450,000,000,000.00 Annually (uh, that's just for the interest)

"you may ask yourself, 'well, how did i get here?'"

the simple answer is reckless, deficit spending.

it is certainly fair to point out that most economists agree that federal deficit spending is helpful, and even necessary, during recessionary times.  it primes and stimulates the economy through periodic, cyclical downturns, acting like a financial shock absorber. 

however, under responsible economic stewardship, this should only be a temporary tactic to help the economy gain momentum.  once this goal is achieved, the government should then get back to fiscal restraint and discipline. this seems like a simple and rational concept, right? well, it is not the way the u.s. federal government likes to run its financial affairs.

This is especially true over the last 8 years. americans were introduced to a unique brand of runaway deficits, caused by a deficit-spending-extravaganzathe bush administration's policies created a vicious kind of deficit-spending-on-steroidscombining substantial spending increases with massive tax cuts, which cost $1.8 trillion over 10 years, and of course, the two wars in the middle east. 

the brookings institute writes,
" Paying for the tax cuts would require monumental reductions in spending or increases in other taxes. To offset the revenue losses in 2014 would require, for example, a 48 percent reduction in Social Security benefits, a 57 percent cut in Medicare benefits, or a 117 percent increase in corporate taxes." and, "Over the long run, making the tax cuts permanent would cost as much as repairing the shortfalls in the Social Security and Medicare Hospital Insurance trust funds. Thus, to the extent that Social Security and Medicare are considered major long-term fiscal problems, making the tax cuts permanent should be seen as creating a fiscal problem of equivalent magnitude."
while the bush administration and a g.o.p.-dominated congress increased the deficits and did nothing to offset the cost of the tax cuts, some republicans were still able to create a politial issue out of "earmarks," or "pork barrel spending." the earmarks account for about $17.2 billion in federal spending. although this is certainly a lot of money, it only account for .005% of the 2009 federal fiscal budget ($17.2 billion of $3.1 trillion). earmarks were, and are, hardly the cause of the doubling of our national debt under george w. bush.

soon after 9.11, bush told americans to  "get down to Disney World in Florida." people should "enjoy life" and spend money and go shopping. there was no need for shared sacrifice, as is an american tradition during previous times of war. 

the tax cuts were safe under bush. yet, in breaking with the "conservative" stereotype, the republican-dominated government spent wildly. The u.s. waged two wars in the middle east. the financial drain of the iraq war quickly rose to $10 billion, then $12 billion, per month. this was a boom-time on wall street and in the u.s. real estate markets as well. just having recovered from the "dot-com" bubble bursting, the u.s. economy was surging. even alan greenspan, then federal reserve chairman said, "at a minimum, there's a little froth'' and "it's hard not to see that there are a lot of local bubbles" in the real estate market.

despite the fact that the economy was accelerating, the federal government continued to rely on deficit spending. the president obsessively defended his tax cuts, as if they are the panacea for all things economic. even though in terms of deficit spending, tax cuts are just another form of expenditure. 

this was a recipe for doubling the national debt and squandering an opportunity to balance the budget. 

and that's exactly what happened.

•   •   •

long after bill clinton declared, "the era of big government is over," george w. bush revived it and made it even bigger than ever. and he did this before the 2008 "bail-out."   

after being handed a u.s. federal government with three unprecedented years of surpluses, bush policies increased the u.s. national debt from $5.7 trillion to $11+ trillion.

no doubt, bush will be blamed for much more than the u.s. national debt. among many other bush-casualties is the destruction and demise of the "g.o.p./republican" brand:

"We've strayed a long way from the principles the party was founded upon,'' said Representative Jeff Flake, an Arizona Republican.

meanwhile all of us, including our children, and our children's children, will be paying the heavy price for an immensely strayed and failed leadership.

this is the biggest issue that never was.

•   •   •

it doesn't take an expert
clearly, we're not economic experts here at the INKSPOT PROJECT and we don't pretend to be.  but we do wish to promote awareness of this important issue.


Facing Up To The Nation's Finances (




A MATTER OF LIFE AND DEBT, by Margaret Atwood


[fact: the last president to create a surplus was bill clinton in 19981999 and 2000 and encouraged the american people and the future leadership to pay down the national debt by 2015.]

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