Overspent and overdrawn.
As May progresses, you’ll hear a lot about the ‘debt ceiling,’ – the amount of money that the United States Treasury may legally borrow. It’s like the credit limit on your MasterCard (only with something like 12 more zeroes).
At this writing, the U.S. debt limit is fixed at $31.4 trillion by virtue of a bill that President Biden signed into law on Dec. 16, 2021. That law raised the debt limit by $2.5 trillion.
That $2.5 trillion has since been borrowed and spent and Treasury secretary Janet Yellen now warns that the by June 1, Treasury will again hit the debt limit and will be unable to legally borrow any more money.
When that happens, the government runs the risk of not having immediately available cash to cover payroll or to make the interest payments on the money that has already been borrowed. Failing to make those interest payments would result in a first-ever default on the nation’s debt and would send shockwaves throughout the world financial system.
The Biden economy isn’t helping. In fact, it’s slumping. GDP has grown at an anemic 0.9 percent over the past five quarters. A slumping economy results in slumping federal tax receipts. Year-to-date federal tax revenues are running $74 billion behind the same period last year.
Meanwhile, federal spending continues apace. Year-to-date federal expenditures are $359 billion higher than the same period last year. The federal government is spending more while taking in less. Understanding the consequences doesn’t require an Ivy-league degree. (To the contrary, given that our government is disproportionately populated by Ivy-league graduates, possession of an Ivy-league education apparently precludes such understanding.)
With the debt ceiling looming, House Speaker Kevin McCarthy late last month pushed a bill through the House that he called the “Limit, Save & Grow Act of 2023.” The bill would authorize a $1.5 trillion increase in the debt ceiling. But the bill also rolls federal spending back to the levels of two years ago, claws back unspent COVID-19 money, eliminates funding for the 87,000 new IRS agents the Biden administration wants to hire and rolls back most of Biden’s student loan forgiveness program.
None of that sounds crazy to normal people. Normal people know that when income doesn’t meet expenses, expenses must be reduced.
But Washington, D.C. isn’t heavily populated by normal people. It’s populated by establishment, leftist, big-government elites who are responding to McCarthy’s bill by shrieking about children being starved and the Earth burning to a crisp. Joe Biden is one of those elites and he promises to veto the bill should it somehow magically get through the Democrat-controlled Senate and get to his desk.
So, a crisis looms. Federal revenues are down. Spending is up. The Treasury is soon out of money.
Of course, spending must be reduced. Normal American businesses and households expect to make such choices. But our president and most members of Congress have no such expectations, as they haven’t for decades.
The question therefore begs. How much longer can we tolerate being so thoroughly misgoverned?