Tuesday, July 26, 2011 – by Richard Ebeling
Dr. Richard Ebeling The current fiscal crisis that fills the pages of the newspapers and the news shows on television has all been revolving around the issue of raising the government debt limit.
In fact, the present Congressional-approved debt limit of around $14.3 trillion dollars was passed through in June of this year. The U.S. Treasury Department has been merely juggling the books to shift funds and keep spending money. The government has been using tax revenues that it is legally obligated to set aside for federal employee retirement accounts – and which is supposed to be "put back" at some point when the government formally has the authority to borrow more and get further into debt. It is the type of thing that if done by a private employer to cover his current business expenses would be labeled misappropriation of funds.
Huge numbers are bandied about in the media and among the politicians concerning how much will be cut from future spending as part of a deal to raise the debt limit. Trillions of dollars are to be eliminated from the government's budgets in the years to come. Of course, most of those spending reductions are to occur later rather than sooner, with little or no specification of exactly what programs would be cut or precisely when.
Furthermore, when both the Democrats and the Republicans propose anywhere from $1.5 trillion to $9 trillion in less spending in future years and decades they never specify what "baseline" is being used to estimate the spending reductions. What really is being proposed in virtually all these alternative plans is a projected decrease in the rate of increase in total government spending. That is, hardly anyone is suggesting that the "slice" of the national economic pie consumed by government through taxing, spending and borrowing actually should be reduced.