Few nations can rival the United States in its ability to turn mundane processes such as putting together a budget into melodramatic must-see television that evokes the entire range of human emotions such as greed, betrayal, anger, jealousy, gluttony and even lust.
Most budget hearings are dry, uneventful meetings involving discussions of revenue and expenditures that would not attract an audience big enough to fill up a men’s room at the local gas station. Fortunately for those of us who revel in entertainment politics, our nation’s citizenry is periodically treated to months of verbal sparring by the leaders of both political parties who seem to revel more in demonizing each other than in coming to an agreement that would actually balance the budget.
The drama of the budget process is heightened due to the debt ceiling, a cap on all federal expenditures that may be spent in a given year. This fiscal ceiling was originally adopted by Congress in 1957.
The motivation for adopting the debt ceiling was to deter government spending by forcing members to go on the record to vote in favor of new appropriations. This deterrence was short-lived, however, as the debt ceiling was lifted three years later in 1960 by Congress.
Once the legislators realized how easy it was to increase spending with a simple vote that did not cause the peasantry to storm the Capitol with pitchforks and torches, then it was off to the races with dozens of similar votes in the ensuing years. Indeed, the Department of the United States Treasury reports that the debt ceiling has been raised or otherwise modified 78 times since 1960.
The sheer number of times that Congress has increased the debt limit should quell any criticisms that our legislators are not hard at work doing important government stuff. Even more impressive is the scale with which these votes to increase the debt ceiling has permitted the national debt to explode since 1960, particularly when compared to the growth of the population in the United States.
In 1960, the national debt was equal to $382 billion and the national population was about 179 million persons. In the ensuing 63-year period, the country’s population increased by 151 million to 330 million persons — an impressive increase but not quite double.
During the same time period, however, the national debt skyrocketed to $31.5 trillion — representing an 82-fold increase in absolute terms. So even though the population did not even double during that 63 years, the national debt increased from what was a per capita amount of $2,134 in 1960 to $95,151 per capita in 2023 or more than 44-fold — a truly outstanding record of fiscal profligacy.
The general public is hardly on board with this ever increasing ocean of red ink. Indeed, most polls conducted in recent years underscore the hostility with which most voters view the ongoing inability of the federal government to put its financial house in order
A March 2023 poll by AP-NORC revealed that 60% of those surveyd believed the government was spending too much, 16% said the government was spending too little and 22% stated that the government was spending the right amount.
So the world has watched for the past several months as Speaker of the House Kevin McCarthy, R-Calif., has conditioned any increase in the debt ceiling on an agreement by the White House to cap federal spending for the next two years. President Joe Biden, for his part, refused to even speak with McCarthy for the past several months, demanding that the GOP-controlled House pass a clean increase with no spending concessions.
McCarthy called Biden’s bluff and oversaw the passage by the House of an increase in the debt limit coupled with spending caps. The spending cuts are modest and the funding to the widely-despised IRS has been cut back, but the deal will not reform or restructure the three horsemen of the apocalypse that are driving the nation into the financial abyss — Medicare, Medicaid and Social Security.
So even though the deal is a welcome improvement in that it is at can boast of some caps on discretionary spending, the deficits will continue to spiral upward into the distant future.
These recurrent fiscal Gunfights at the OK Corral undermine the credibility of the American government and highlight its apparent inability to manage the nation’s finances.
The current practice by Congress to careen from one debt ceiling battle to another does little more than to make everyone ranging from foreign central bankers and Wall Street money managers to ratings agencies and retail investors conclude that the United States is squandering its pre-eminent position as the global economic powerhouse.
The fact that the Congress and the president engage in this political brinkmanship over and over again with no apparent learning curve does not bode well for the nation’s financial future or the economic wreckage that will be left to future generations.
Jefferson Hane Weaver is a transactional lawyer residing in Florida. He received his undergraduate degree in Economics and Political Science from the University of North Carolina and his J.D. and Ph.D. in International Relations from Columbia University. Dr. Weaver is the author of numerous books on varied compelling subjects. Read more of his reports — Here.
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