Berl Falbaum
We’ll start with a two-part question: (a) What does the debt ceiling deal do to buttress the country’s financial foundation or (b) avoid a potential bankruptcy?
The answers (a) nothing and (b) nothing.
Okay, we’ll agree it permits the raising of the debt ceiling, but that would have happened even if the powers to be had not met the June 5 deadline. Yes, we may have faced some serious, albeit short-term repercussions, but the president and Congress could not have avoided it.
No self-respecting politician would be party to creating economic chaos and then expect to be re-elected. Yes, some, in both houses, still voted “no” but they knew it would pass and thus, they could stand on “principle.” Talk about having your cake and eating it too.
Since 1960, the debt ceiling was raised 78 times, 49 under GOP presidents and 29 times under Democrats. And, there is no reason to conclude it would not have happened the 79th time.
The most serious problem: The national debt was not addressed at all. More on that later.
First, a deeper look at the deal with emphasis on a few major items. Admittedly, it’s complicated; we can speculate that even those who passed it, don’t understand it all. There wasn’t even time to read the 99-page document between the time President Biden and House Speaker McCarthy reached an agreement and the vote.
• The package reduces proposed spending by about $136 billion: $55 billion in 2024 and $81 billion in 2025. It does not — does not — cut any existing programs. To put this figure in perspective, consider that in the last quarter of 2022, interest alone on the nation’s debt was $213 billion, up $63 billion from the same period a year earlier.
• Claims that the deal would cut between $1.4 and $2.5 trillion in the next 10 years are, to be kind, disingenuous. The programs included are “suggestions” and future lawmakers are not bound by them. Worse, the nonpartisan Congressional Budget Office (CBO) said even if adopted in coming years, while some items would save money others would increase the deficit.
• There are also several non-financial items, including the requirement that able-bodied, childless low-income adults younger than 55 work 20 hours a week or be engaged in job training or job searches. If they don’t meet that standard, their benefits end after three months.
Not to be ignored, as The New York Times pointed out, the agreement includes numerous “side deals” (which have not been analyzed publicly) and “accounting tricks.”
And it ain’t a done deal yet. Congress now has to pass 12 appropriation bills to implement the debt ceiling deal. As usual, the media centered on the political divide, which makes good copy, rather than the substance of the issue.
Which brings us to the U.S. national debt that was hardly mentioned by President Biden or Congress. And the mainstream media, while gushing, ranting, fretting and hyperventilating about the political standoff, also generally ignored the only issue that can, if faced, save us from eventual bankruptcy.
As I wrote this column, the debt stood at $31,823, 010, ___,___. I could not fill in the last six numbers because they change too quickly. The debt increases $45.486 per second, $2,729.16 per minute, or $163,749,60 per hour. Revenues total $4.6 trillion, but we are spending at a rate of more than $6 trillion.
You might click on usdebtclock.org and witness the debt climb in real time. It’s scary.
Forbes Magazine reports that the national debt is equal to $247,766 per taxpayer or $94,710 per citizen.
How fast has the deficit been growing? In 1929, it was a mere $17 billion. It hit the one trillion dollar mark in 1982 at $1.1 trillion, $5.6 trillion in 2000; and $30.8 trillion 2022.
The national debt has more than doubled in the last 10 years; if it doubles again, it will be more than $62 trillion, or three times greater than the current gross domestic product (GDP).
And therein lies the tale.
When the government debt exceeds 85 percent of the GDP, it becomes a drag on economic growth. It is currently at 120 percent.
The president and Congress did absolutely nothing to address the debt-GDP ratio. They may crow about achieving a by-partisan deal, but it left the country just as financially vulnerable, if not more so, as it was when negotiations began.
Ezra Klein, writing in The New York Times, described the agreement as follow: “…in order to get a deal like this is like threatening to detonate a bomb beneath the bank unless the teller gives you $150 and a commemorative mug. It’s a bizarre mismatch of means and ends.”
One day there will be no more wiggle room. We will try to kick the can — you know, that can —but it will not move. Instead, it will break our toes.
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Berl Falbaum is a veteran political reporter and author of 12 books.
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