The Daily Camera asks: Lawmakers in Washington continue to be divided about raising the $14.3 trillion debt ceiling, which faces a deadline of Aug. 2, the day the Treasury Department says it will lose borrowing authority. Meanwhile budget talks regarding possible tax increases and debt reduction continue. What do you think?
Debt ceiling? What debt ceiling? “In the last 10 years, Congress has raised the debt ceiling 10 times,” notes economist Veronique de Rugy.
The real problem is excessive government spending that has created the huge debt. Spending has increased more than 60% in the past ten years. “43 cents of every dollar spent is borrowed,” de Rugy estimates. According to USDebtClock.org, the federal debt exceeds $46,000 per U.S. citizen.
This spending is unsustainable and hazardous. The Congressional Budget Office warns of ” lower income growth” and risk of a “sudden fiscal crisis” that requires “spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.” Taxation and government borrowing crowds out investment in private capital. This diverts “resources that could be used more productively. … U.S. companies are less likely to build new plants, conduct research, and hire people,” de Rugy explains.
As a remedy, Reason magazine suggests a “19 Percent Solution,” which refers to typical levels of tax revenue relative to GDP. The plan would balance the budget without raising taxes by reducing spending by less than 4% annually for ten years.
Since entitlement programs drive much of federal spending, these cuts will be unlikely so long as people see the programs as moral. But as forced charity, these entitlement programs are immoral. Charity can be virtuous, but there’s no virtue in being forced to donate to a charity, or empowering politicians to force others to do so.
This was originally published in the Boulder Daily Camera on July 16 2011.