The views The Advocate expressed in its editorial about the debt ceiling add to the mass of misinformation being generated on the subject.
The U.S. Treasury has to pay about $223 billion a year in net interest on our nearly $17 trillion of national debt. Federal revenue is about $2.8 trillion a year. To suggest that trying to reduce our debt and the costs of our debt service is unimportant and creating a false crisis is to seriously misunderstand the consequences of massive government debt.
The more our debt increases, the more investors all over the world lose confidence in our securities. When interest rates start rising, as they eventually must both to compensate for greater risks and to begin unwinding the reckless monetary expansion the Fed has pursued for the past six years, the entire fiscal agenda of the U.S. government will collapse.
The United States should never default on payment of the principal and interest due on any of its loans. But making all our interest payments and refinancing our maturing debt obligations can certainly be accomplished using no more than 5 percent to 10 percent of our $2.8 trillion of annual revenue, not to mention the prospects for gradually retiring our debt. The Advocate seems to be joining the president in his deceitful contention that borrowing more money is necessary to “pay our bills” and that we would not be increasing our debt (“Not one dime!”) by borrowing more money because we somehow already owe it. Like the president, you seem not to have considered reducing expenditures as a way to make ends meet.
Any small-business owner or banker in Baton Rouge can explain to you how making debt payments is different from having insufficient income to support a given level of expenditures.
Failing to pay debt service is a financial default. Not being able to afford ongoing expenses, in contrast, is just part of the normal process of business management in which income and expenses must be prudently balanced. If expenses continually exceed income, then expenses must obviously be reduced. A businessman does not commit a financial default when he is forced by declining revenue to downsize or cut his overhead costs.
The national debt and its monetization by the Fed are the main causes of the precarious economic condition of our country today. For two generations both the Democrats and the Republicans have agreed on destroying the value of our money and burdening us all with this catastrophic debt. They both favor the heedless printing of money and increasing of debt, leaving the sorry reckoning to our children.
If we keep spending 150 percent of our revenue year after year, borrowing ever more to cover the deficits, we are inviting bankruptcy. It is far from necessary to raise our debt limit any higher. Balancing the national budget would be a giant step toward correcting our worst mistakes in economic policy. Unless we live within our means we will soon find ourselves in greater poverty. No amount of borrowing or tricky rhetoric can change that.
Michael S. Wolf