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The Debt Ceiling Debate; Self Inflicted Stupidity

Watching Congress debate whether to raise the debt ceiling is both hilarious and maddening. The theory behind its creation was to provide Congress with a reminder that its income should roughly equal the amount it spends so that it doesn't have to take on additional debt.

In practice, however, it does nothing to restrain the growth of government debt and leads to weeks of laughable demagoguery about government spending and taxes. Years of experience tells us that it has no impact on government borrowing to finance the budget.

If anyone was really concerned about the deficit, they would have those conversations when Congress was planning another tax cut or contemplating a new spending initiative. Discussing it after the fact serves no purpose as GOP Senator Chuck Grassley of Iowa explained during the Bush administration

Grassley, Sept. 2007: "Increasing the debt limit is necessary to preserve the full faith and credit of the United States of America. Without an increase in this limit, our Government will face a choice between breaking the law by exceeding the legal limit or breaking faith with the investors by defaulting on the debt. Neither of those choices is acceptable, and we have never done them."
"Critics sometimes object to raising the debt limit on grounds that it will allow the Government to borrow more money, but refusing to raise the debt limit is akin to refuse to pay your individual credit card bill after you have already gone shopping and bought something. We cannot pass tax bills and spending bills and then refuse to pay our bills. The time to control the debt is when we are voting on bills that actually create that debt."

Many Americans choose to blame Congress for the deficit and resulting debt limit charade, but voters share a good part of the blame. Since the Reagan administration, we have voted for politicians [Republicans mainly] that tell us that they will lower our taxes, without reducing government services, by cutting fat or through the magic of supply-side economics. In our heart of hearts we know that isn't realistic, but we prefer to ignore reality. And, it's not that we have been fooled once and then wise up. Nope. After 40 years, many Americans still support candidates who say they will cut taxes while balancing the budget.

So, here is a reminder for those that need it; tax cuts don't pay for themselves, and tax cuts with spending increases lead to budget deficits. Budget deficits require government borrowing and no amount of political posturing over raising the debt ceiling will ever change that.

#news #economics #politics

By: Don Lam & Curated content

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