1
   

The debt limit has been raised, and spending plans rejected

 
 
Reply Fri 19 Nov, 2004 12:25 pm
Anyone who has read my previous posts probably already knows my views on the GOP's dismal fiscal policy--this is the next installment, prompted by recent Congressional actions. First, you can't blame the Dems for the last couple of years; they don't control Congress or the Whitehouse. As I've pointed out before, the GOP has developed a habit of voting for subsidies, pork barrel, and other disguised entitlements while cutting taxes at an unprecedented rate. The GOP spends more on entitlements than the Dems. This administration and its Congressional buddies also cannot blame the recession or the war. We've had worse recessions and worse wars without such amazing deficits, but more importantly: If the administration was serious about our tax cuts being temporary stimuli dependent upon a sluggish economy, why would they insist on making the cuts permanent in the face of increased spending? Temporary boost or permanent stupidity?There is simply no way to put lipstick on that pig. Cheney once had the audacity to claim that "deficits don't matter." Who do you believe: Cheney, or Greenspan (urging congress and the president to get the deficit under control CNN), Snow (CNN
Quote:

Debt Limit to Rise to $8.18 Trillion
Tax Cut, Spending Caps Are Rejected
By Jonathan Weisman
Washington Post Staff Writer
Friday, November 19, 2004; Page A06

The strict rules that once limited tax cuts and entitlement spending increases lapsed two years ago. Limits on spending lost their teeth. This year, Congress failed to pass a budget altogether.

Last night, with the federal government warning that it was on the verge of defaulting on its debts, the House rejected efforts to reimpose restrictions on tax cuts and spending, then joined the Senate to raise the federal debt limit by $800 billion, to $8.18 trillion.

The collapse of statutory restraints on the growing budget deficit has alarmed Wall Street, befuddled the Treasury Department and elicited calls for a rethinking of the way the government handles its authority to tax its citizens and spend those proceeds.

"The fact is, very little [budgetary restraint] is left in any real form or substance," said Robert D. Reischauer, a former director of the Congressional Budget Office, now president of the Urban Institute.
With last night's passage of the debt ceiling increase, the government's borrowing limit has climbed by $2.23 trillion since President Bush took office: by $450 billion in 2002, by a record $984 billion in 2003 and by $800 billion this year. Just the increase in the debt ceiling over the past three years is nearly 2 1/2 times the entire federal debt accumulated between 1776 and 1980.

A recession, a sluggish economy and five tax cuts in four years -- coupled with soaring defense spending on wars in Iraq and Afghanistan and rising domestic spending -- have turned record surpluses that Bush inherited into a record deficit of $413 billion in the past fiscal year.

Economists and budget hawks fear that rising deficits are contributing to the steadily declining value of the dollar, which will increase consumer costs, and that those deficits eventually will drive up interest rates and slow the economy.

As the national debt continues to mount, Washington is having difficulty keeping up. In August, Treasury Secretary John W. Snow implored Congress to raise the debt limit to ensure that the Treasury could continue to borrow the money it needed to finance government operations and pay benefits such as Social Security. But with an election looming, lawmakers declined to act.

Last month, the government crashed into the debt ceiling, and the Treasury began borrowing from a civil service retirement fund. On Monday, the Treasury announced it had postponed an auction of short-term Treasury bonds because it was prohibited from borrowing the money. Yesterday, amid continuing uncertainty about Congress's intentions, the agency delayed revealing how many government securities it plans to sell next week. Treasury again warned that the government could default on its debt as soon as today if Congress did not act.

The House convened yesterday morning for a short debate on raising the debt ceiling, then promptly recessed to allow members to attend the opening of Bill Clinton's presidential library in Little Rock. Lawmakers reconvened last night to reject a Democratic motion to reimpose "pay as you go" budgetary rules that would force any increase in entitlement spending or cut in taxes to be funded by equal spending cuts or revenue raisers. Lawmakers later raised the debt ceiling.

Much of the drama amounted to "The Perils of Pauline," Reischauer said, with little real doubt that the damsel in distress on the railroad tracks would be rescued just before the train barreled down upon her.
On Wall Street, however, Congress's lackadaisical response raised eyebrows.

"There's generally a denial that the government would allow itself to default, but some of us are getting a little nervous," said David Wyss, chief economist at Standard & Poor's, the bond rating company, as he watched the House recess yesterday morning without a vote.
By passing such a huge increase in the debt limit, with no strings attached, Congress has effectively given the Bush administration a blank check to continue running large deficits, said Stephen S. Roach, chief economist at Morgan Stanley. "An open-ended license for this kind of fiscal irresponsibility is a recipe for disaster," he said.
Republicans and Democrats in Congress agree that the budget process is badly broken.

Sen. Judd Gregg (R-N.H.), who will chair the Budget Committee next year, said the measure of his success will be "putting in place a very definitive budget with strong enforcement mechanisms on the discretionary and entitlement [spending] side."

Beyond such vows, there is little consensus about what to do, said G. William Hoagland, the top budget aide to Senate Majority Leader Bill Frist (R-Tenn.). The deterioration of tough budgeting has been a slow and steady process. In the 1980s, the size of the annual budget deficit was limited, with rules to force automatic cuts if that ceiling was breached. In the 1990s, similar enforcement mechanisms tried to keep Congress from exceeding annual spending limits and from cutting taxes in such a way that increased the budget deficit. Those rules have now lapsed.
Hoagland said some effort will be made next year to strengthen the authority of the budget committees, possibly by bolstering their membership with party leaders and other committee chairmen. The committees could also be granted the power to usurp other committees' authority if they are not complying with the annual budget blueprint.
But congressional leaders thus far have shown little appetite to rein in deficits through such authority.

This year, under White House pressure, House and Senate Republicans simply opted against adopting a 2005 blueprint for tax and spending policy, rather than accede to the wishes of Senate Republican moderates to reimpose pay-as-you-go rules.
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Discussion • Score: 1 • Views: 985 • Replies: 7
No top replies

 
dare2think
 
  1  
Reply Fri 19 Nov, 2004 02:06 pm
Great post, but I can just hear the bush apologists.
0 Replies
 
McGentrix
 
  1  
Reply Fri 19 Nov, 2004 02:22 pm
Sounds to me like an out of control legislature. What does Bush have to do with that?
0 Replies
 
Cycloptichorn
 
  1  
Reply Fri 19 Nov, 2004 02:42 pm
Quote:
Sounds to me like an out of control legislature. What does Bush have to do with that?


Hey,

When your party controls the House, the Senate, and the White House, as well as having several prominent Supreme court justices, your party is responsible for what is going on!!!

Bush is the party leader; if he wanted the spending to go down, he could make it happen. Don't try to pass the buck on this one.

One of the (few) benefits of having lost the election, you can't blame the democrats for the problems today....

Cycloptichorn
0 Replies
 
RfromP
 
  1  
Reply Fri 19 Nov, 2004 02:50 pm
That law has no muscle if it can be just up and changed like that. What's the point of a debt ceiling being law? It's useless now. What a freaking joke.

The foundation of the Bush house of cards is tenuous and it's going to be ugly when it comes crashing down.
0 Replies
 
Steppenwolf
 
  1  
Reply Fri 19 Nov, 2004 02:57 pm
McGentrix wrote:
Sounds to me like an out of control legislature. What does Bush have to do with that?


You're right; the legislature is out of control. What can Bush do? Veto. Simple, easy, and one of his many powers--a power he never uses for spending. This administration should also stop pushing permanent tax cuts until we can get our financial house in order.
0 Replies
 
roger
 
  1  
Reply Fri 19 Nov, 2004 03:42 pm
Line Item Veto used to be an issue. I think it was defeated

Kinda cool, though. They can not only spend other peoples' money, they can borrow on their behalf.
0 Replies
 
Steppenwolf
 
  1  
Reply Fri 19 Nov, 2004 04:05 pm
I'm not suggesting line item vetoes.
0 Replies
 
 

Related Topics

Leveraged Loan - Discussion by gollum
Web Site - Discussion by gollum
Corporate Fraud - Discussion by gollum
Enron Scandal - Discussion by gollum
Buying From Own Pension Fund - Discussion by gollum
iPhones - Question by gollum
Paycheck Protection Plan - Question by gollum
Dog Sniffing Electronics - Question by gollum
SIM CARD - SimTraveler - Question by gollum
Physical Bitcoin - Question by gollum
 
  1. Forums
  2. » The debt limit has been raised, and spending plans rejected
Copyright © 2025 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 03/15/2025 at 06:28:38