Stop Raising the Debt Ceiling
The federal government once again has reached the limit of its legal ability to borrow money, meaning it cannot issue new Treasury debt without action by Congress to increase the debt ceiling limit. As of this month, our "official" national debt- which doesn't include the staggering future payments promised to Social Security and Medicare beneficiaries- stands at $14.2 trillion.
The debt ceiling law, passed in 1917, enables Congress to place a statutory cap on the total amount of government debt rather than having to approve each individual Treasury bond offering. It also, however, forces Congress into an open and presumably somewhat shameful vote to approve more borrowing. If the new Republican majority in the House of Representatives gives in to establishment pressure by voting to increase the debt ceiling once again, you will know that the status quo has prevailed. You will know that the simple notion of balancing the budget, by limiting federal spending to federal revenue, remains a shallow and laughable campaign platitude.
It is predictable that Congress will once again merely delay the inevitable and raise the debt ceiling, after the usual rhetoric about controlling spending, making cuts, and yes, raising taxes. We have heard endless warnings about how irresponsible it would be to "shut down the government." The implication is that sober, rational, mature pundits and politicians understand reality, while those who oppose raising the debt ceiling limit are reckless ideologues who will harm the economy just to make a point.
But like any debtor that has to reduce its spending, the federal government simply needs to establish priorities and stop spending money on anything other than those priorities. Interest payments on our federal bond debt likely will amount to about $500 billion for fiscal year 2011, an average of $41 billion per month. Federal tax revenues vary by month, but should total around $2 trillion to $2.5 trillion for FY 2011-- an average of perhaps $180 billion per month. So clearly the federal government has sufficient tax revenue to make interest payments to our creditors. For now, those interest payments represent about 12% of the total federal budget.
What nobody wants to admit is this: even if the federal government has only $1.5 trillion remaining to spend in 2011 after interest payments, this is PLENTY to fund the constitutional functions of government. After all, the entire federal budget in 1990 was about $1 trillion. Does anyone seriously believe the federal government was too small or too frugal just 20 years ago? Hardly. So why have we allowed the federal budget to quadruple during those 20 years?
The truth is, in spite of how cataclysmic some might say it would be if we did not pass a new debt ceiling, it is hardly the catastrophe that has been advertised. The debt ceiling is a self-imposed limit on borrowing. The signal congress sends to worldwide markets by raising the debt ceiling is simple: business as usual will continue in Washington; no real spending cuts will be made; and fiscal austerity will remain a pipe dream.
When our creditors finally wise up and cut us off, we will be forced to face economic realities whether we want to or not. It would be easier to deal with the tough choices we face now, on our own terms, rather than wait until we are at the mercy of foreign creditors. However, leaders in Washington have no political will to admit that we cannot afford to continue spending without any meaningful limit. They prefer maintaining the illusion and putting off reality for another day.
Posted by William3 on 05/25/11 10:33 AM
I think Dr. Paul understands well there is no alternative to raising the debt ceiling. He said it is "predictable." But if he is to stay faithful to his oath, he must continue to expound on its absurdity.
He probably also agrees with your other point -- that the entire Fed central banking system must collapse to achieve change. He's the primary point man for the "end the Fed" movement.
We are blessed to have someone like Ron Paul to keep reality alive in the greater political debates of our times. May more of us start to listen to his message.
Posted by WorkingClass on 05/24/11 07:58 PM
Our Fascist Democrats and Republicans are pretending to argue about whether to raise the debt ceiling. In the end they will do so because their owners require it. The phony arguments are to make us believe that we must give up our pensions and savings and health care for the common good. And so the legislation will include "austerity" measures (grand theft). It's just another heist.
We know the Fascists are not concerned about debt. If they were they would not be cutting taxes and increasing war spending.
Posted by Zenbillionaire on 05/24/11 07:19 PM
"Ron Paul has decent ideas, but "he's like a fireman running into a burning building with a hose not connected to a fire hydrant."
Bravo Mr. Cate. Exactly my thought.
Posted by Bischoff on 05/24/11 06:32 PM
With all his years in the U.S. Congress, you would think Ron Paul understood that there is absolutely no alternative, but to continue to run up government deficits.
I will agree with the Congressman that raising the debt ceiling limit is a farce. All raising the debt ceiling does is to formally declare that nothing will change in the way the U.S. Congress spends money. Ron Paul should know it. Nothing will change whether the "Debt Ceiling" is raised or not. Unless the entire Fed central banking system is to collapse, nothing can change.
The post-1935 Fed system, which monitizes government debt and creates an "irredeemable" currency, attempts through certain manipulations to mirror the pre-1935 Fed which was built on the "Real Bills Doctrine" tied to the issuance of a "redeemable" currency.
Congressional "earmarks" to fund projects in Congressional Districts are an essential part of the manipulations. Routinely, 425 out of 435 Representatives of the U.S. House will put in "earmarks" for federal projects in their district. Failure to put in these "earmarks" during the budget process will bring down on the Represenative the wrath of the House Leadership, irrespective of party affiliation.
How can the congressional leadership implore their Representatives to place "earmarks" into the budget, and then asks them to vote for a "Debt Ceiling" to deny the funds for the very projects they had been asked to request?
Posted by Joelg on 05/24/11 05:55 PM
A few small gov budget cuts between now and the end of the year do not sound catastrophic. Might as well start taking the first steps now! It would probably strengthen the country.
Posted by EdwardUlyssesCate on 05/24/11 02:43 PM
"If you're not at the table, you're on the menu."
Anonymous Wall Street
In every country and state, ordinary folks do not have a REAL representative with their interests at heart. Most are just ruling-class want-a-bees, who've already sold their mind, body and soul to the highest bidder. In fact, running for office is the gauntlet they run to proof that they're willing to sell out their fellow countrymen.
This is what needs to come to an end if we're ever going to be able to avoid being permanently "on the menu." That's why the debt-limits, the money-printing, the globalization and other problems continue to this day.
Ordinary folks have little or no representation "at the table!"
Ron Paul has decent ideas, but "he's like a fireman running into a burning building with a hose not connected to a fire hydrant." So says Howard Buffett, Warren's daddy, back in the 40's, about the same circus, different clowns of that era.
Posted by loriewil on 05/24/11 01:01 PM
Posted by Nightcrawler on 05/24/11 12:10 PM
Dr. Pauls colleagues will posture and strut, demanding a Constitutional ammendment before they will raise the debt limit. This very well may pass in Congress and Obama may sign it, but only if they know there is no chance of the states ratifying it.
If a Constitutional Congress is called by the states to ratify the ammendment it would take months if not years for the process to play out. Plenty of time to kick the can further down the road and the cover to blame the states for the reckless spending. They only need to stall until Nov. 2012.
There is no way any state looking for a handout is going to tie the hands of the Feds.
Posted by Avatar on 05/24/11 12:03 PM
Good Luck Ron!
Posted by Zenbillionaire on 05/24/11 11:38 AM
Fine rhetoric again Dr. Paul. You say "But like any debtor that has to reduce its spending, the federal government simply needs to establish priorities and stop spending money on anything other than those priorities." I've tried this approach on my family (at the advice of Richard Daughty) and achieved the same results he did; they just tell me to put down the gun, stop fondling my gold coins, take a shower and get a job!
If the American People (tm) would just get off their lazy butts and do a little real work our ever faithful government servants wouldn't have to confront the horror of having their credit cards cut up by evil rat faced sales clerks at the shopping mall and life would, once again, be good.
Posted by kaydellc on 05/24/11 10:54 AM
Raising the debt ceiling without plan to reducing the extravagant spending and increasing budgets and entitilements at 6% a year is like giving a bottle of alcohol to the alcoholic with the goal of quitting his addictive habit.
Posted by Leonardo Pisano (www.leonardopisano.com) on 05/24/11 10:16 AM
Yes, the PE is believed to be of Anglo-American origin.
For a good background, I suggest to read Tragedy and Hope and/or The Anglo-American Establishment from Prof. Carroll Quigley (free pdf downloads: Click to view link
Posted by dotti on 05/24/11 09:16 AM
Re: We have heard endless warnings about how irresponsible it would be to "shut down the government." The implication is that sober, rational, mature pundits and politicians understand reality, while those who oppose raising the debt ceiling limit are reckless ideologues who will harm the economy just to make a point.
Well put by RP. This is where the MSM and the politicians promote the agenda of the PE.
BTW, elves (anybody?): is the Anglo-American elite the same as the PE?
Posted by rossbcan on 05/24/11 08:07 AM
RP: "It would be easier to deal with the tough choices we face now, on our own terms, rather than wait until we are at the mercy of foreign creditors."
Key point. Foreign creditors have been, for some time been engaged in the take-down of the US financially. Their goal is control which is why they coerce politicians to be reckless under the false pretext of "will of the people" and helping the unfortunate.