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Administration Seeks To Raise Debt Limit For Fourth Time In Five Years

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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.

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About David R. Mark

  • http://www.morethings.com/log Al Barger

    Now, it’s fair enough to slap Dubya and the Republican Congress around for the deficit. It’s absolutely unconscionable and irresponsible.

    But it’s just plain SILLY to blame it on “tax cuts for the rich” on every level. For starters, even by your stilted numbers, this only accounts for what, a tenth of the ongoing deficit?

    Except that it’s really not that. These tax cuts for the people who actually pay the most taxes, ie The Rich, tend to generate more economic growth and tax revenue. It’s not a zero sum game. In any case, the amount is small enough to be marginal to the whole deficit even if you pretend that the economy got NO benefit from it.

    How about instead we look to all the social welfare spending (including all kinds of corporate welfare) that are more like the REAL culprits here.

    In reality, the main #1 economic screwing of the pooch from W is the creation of this unfunded permanent free drug benefit that we don’t even have the beginning of any way to pay for. THAT is FAR worse for the deficit and the overall public good than a little well-deserved tax cutting.

  • gonzo marx

    thanks for the Article and the links David

    a good read, and some important Info

    the Opinion is just that, but it is a fairly safe bet to say that the factors mentions, and more that went unspoken, have lead the Administration into the Financial problems our Government is experiencing

    the killer here is raising the Debt ceiling so many times, than attempting to skew numbers by using the newly raised ceiling and NOT reporting the costs for Afghanistan and Iraq in the Budget

    one would think ANY fiscally Responsible individual would be quite pissed at the seemingly Enron style of accounting used by the WH

    Excelsior!

  • troll

    Al – *But it’s just plain SILLY to blame it on “tax cuts for the rich” on every level.*

    which might be why the author doesn’t do so…it appears that he points to multiple causes

    *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.*

    troll

    troll

  • david r. mark

    I do mention the latest cost for the tax cuts, vs. the much-ballyhooed entitlement costs.

    I won’t say that the deficit is caused by tax cuts for the wealthy as long as conservatives don’t spin that everything changed because of 9/11.

    The truth is that the Bush Administration has been a giant candy store for corporate interests. Mega corporate welfare, tax cuts for the wealthy, pork-laden and/or no-bid contracts for such things as Iraqi and Katrina reconstruction. If there’s a way for the Bush Administration to put more money into the hands of its corporate friends, it’ll do so.

    And while costs related to 9/11 have created — depending on the estimate you use — 30-40% of the Bush Administration’s total newly created deficit, the rest of it (60-70%) can be tied to some mix of bloated contracts, tax cuts and corporate welfare.

    Simply, this isn’t the way to run a “fiscally conservative” administration.

  • http://www.templestark.com Temple Stark

    The simple question seems to be, if the deficit was being cut, why raise the ceiling on debt*? You can have both, but what’s the reasoning for both.

    * Yes the two debt and deficit are different animals. In this discussion though they happen to be the same

  • david r. mark

    They have to raise the debt ceiling — technically the “statuatory debt ceiling” — because the additional deficit will push the overall debt above $7.38 trillion.

    The debt-cutting is tricky. Bush is saying that by 2009, he’ll have the annual debt cut in half — or to a little more than $200 billion. But that’s still $200B on top of $300B on top of $300B, etc.

    And since the administration doesn’t include certain items when it produces its budget — i.e. the true cost of the wars (which are budgeted via emergency spending), as well as unforeseen costs, like Katrina — the $333 billion number isn’t all that accurate.

    It’s kind of like making a copy of your bank statement when you have $1,000 in savings and saying “look at how well I save money,” and then spending the $1,000 and also another $1,000 on your credit card. It sounds nice, but it’s not accurate.