Treasury Secretary John Snow, in a letter to lawmakers, said Thursday that the Bush Administration will soon ask Congress to raise the government’s debt ceiling, now capped at $8.18 trillion.
It will be the fourth time in five years that the administration will seek to increase the debt limit. Failure to do so would likely cause a federal default by March — an unimaginable crisis that would rattle bond markets, force interest rates higher, and shake the economy.
Congress is likely to raise the limit by next month.
President Bush doesn’t talk much about the federal deficit, which has grown by more than $2 trillion under his watch.
Officially, the White House lists as one of Bush’s “accomplishments” that the administration remains “on track to cut the budget deficit in half by 2009.” The budget deficit for the current fiscal year — $333 billion — was trumpeted by Bush as a sign Bush-onomics was “working.”
But the $333 billion figure was phony — under-representing the cost of the Iraq and Afghanistan wars and not factoring in additional expenditures to fix the alternative minimum tax.
When he’s not patting himself on the back for the $333 billion annual deficit, Bush has been thanking the Republican-led Congress for its deficit reduction skills. The Bush-onomics math? Entitlements were cut ($39.7 billion) to offset Bush’s latest planned tax cut for the wealthy ($100 billion). No wonder the deficit is growing.
Federal Reserve Chairman Alan Greenspan — no dummy when it comes to economics — paints a different picture when discussing Bush-onomics.
Here’s what he said before the Senate Budget Committee in April: “(T)he federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years … Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse.”
The Republican-led Congress will rubber-stamp Snow’s request and raise the debt ceiling next month. But perhaps the Bush Administration should spend less time spinning the deficit, and more time reducing it.
This item first appeared at Journalists Against Bush’s B.S.