published Tuesday, November 22nd, 2011

'Super committee' aside, national debt will grow

  • photo
    Supercommittee member, Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., fends off reporters as he arrives to meet in the Capitol Hill office of Sen. John Kerry, D-Mass., with other Supercommittee members as time for action by the deficit reduction panel grows short, Monday Nov. 21, 2011, of Capitol Hill in Washington. (AP Photo/J. Scott Applewhite)
    Photo by Associated Press /Chattanooga Times Free Press.

Are you surprised about the debt supercommittee's collapse?

Shouldn't all of us agree -- readily -- that it is desirable not to increase our national debt?

If the now-$15 trillion debt were divided equally among all Americans, it would be a burden of $48,000 per person!

And in an alarming new sign of how big the problem is, our debt has just surpassed our gross domestic product -- the total economic output of our country for an entire year.

Isn't that a sad testament to our financial recklessness?

Our country fortunately is not in a war on the scale of, say, World War II. And despite serious economic problems, we are not in a true depression, either. So we are in a position to reduce the cataclysmic spending that has gotten us into this sorry fiscal state of affairs -- if only we will.

But it appears that we will not do that anytime soon, at least not to the extent that would do our nation's finances and our economy very much good.

By Wednesday -- tomorrow -- a bipartisan so-called "super committee" in Congress was supposed to make a recommendation on ways to cut at least $1.2 trillion from federal budget deficits over the next decade. But the panel threw in the towel late Monday, saying it could not reach an agreement.

The committee's recommendation would have gone to the full Congress for approval or rejection. But with that not having happened, a range of automatic spending cuts in the neighborhood of $1 trillion is scheduled to be implemented over the next decade.

The committee's work appeared to be doomed early on by Democrats' insistence on huge tax increases, though heavy spending rather than "insufficient" taxes is what created the debt.

Republicans offered some much smaller tax increases in addition to some substantial spending cuts, but those overtures were rebuffed by Democrats.

With or without a deal by the super committee, though, our nation will remain in serious debt trouble.

Even if the panel had agreed to some sort of deficit reduction package and Congress had passed it, the reductions would only have slowed the growth of the debt. They were far too small to halt it.

The same is true of the automatic spending cuts that will kick in since no deal was reached -- and those automatic cuts have the additional downside of disproportionately slashing our national defense budgets.

What's more, there is already a lot of talk in Congress of undoing some of the "automatic" cuts that are now supposed to take place.

So we are faced with the ugly fact that too many of our lawmakers, and President Barack Obama, want even more taxes and more spending -- twin threats that are throttling our economy and destroying job growth.

Americans may have many reasons to be grateful on this coming Thanksgiving Day, but the "thanks" that some lawmakers and the president deserve in the 2012 elections will be removal from office for their irresponsibility.

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nucanuck said...

Two really bad options.

If we try to spend, borrow, and expand the money supply rapidly enough, we may be able to hold the economy together for several more years before the dollar fails or before the nationalized interest rate structure breaks its hobbles, but we will have simply dug a deeper hole with an even more painful recovery. This path drives up prices on essentials and hurts the bottom 75% the worst.


We can cut spending and continue with relatively low tax rates. That is a cure, but it will contract/deflate the economy sharply during the necessary years long debt reduction/destruction. Unemployment would soar. The government and the bankers hate this solution because enormous amounts of wealth would be destroyed...bonds, stocks, even gold would fall hard...every level of society would be hurt and hurt badly.

I suspect that cutting spending would be better for the country in the long run...if we can survive it without complete chaos. We are in a pickle!

November 22, 2011 at 2:01 a.m.
conservative said...

"the reductions would only have slowed the growth of the debt. They were far too small to halt it." To be clear, our debt would have INCREASED under the Demoncrat proposal - nothing new here. Did anyone believe Demoncrats would have offerd REAL cuts in spending?

November 22, 2011 at 8:59 a.m.
ogolindaq said...

Let's give all the information to a class of top graduates in economics etc. I bet they can come up with a deal that would work for all of us. It isn't the Government needs More Money to run, it is that it needs to spend the money it receives in a sensible and responsible way without special interests. The students would not necessarily have their own pocketbooks lined by their decisions, like our congress does.

November 22, 2011 at 10:01 a.m.
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