Friday, October 18, 2013

A rising torrent of debt and destruction

A rising torrent of debt and destruction

As absurd as it sounds, the federal government borrows money in order to pay the debt service on money it has already borrowed and spent. Is it any wonder that today the government’s debt has reached $17 trillion?

In his zeal to persuade Congress to let the government borrow another trillion dollars over the next nine months, Mr. Obama has stated that raising the debt ceiling will not add to the nation’s debt. He is either willfully ignorant or Clintonesque in his use of misleading words.

He knows the feds never have declined to borrow whatever they want, whenever they want it, up to the limit of their legal borrowing authority. They have done so with their eyes on only immediate political needs, with disdain for the economic consequences and with contempt for the future.

However, the future cannot sustain this much longer. The half-trillion dollars a year the feds now pay in debt service on current and ancient debt is equivalent to one-fifth of all the yearly revenue collected in taxes. The $1.2 trillion the feds borrow and spend each year is the equivalent of half of all the yearly revenue collected in taxes.