Posted on 01/28/2006 7:19:25 PM PST by hubbubhubbub
In a shocking development, the Treasury Department website is openly stating that as of January 24, 2006 our national debt stood at $8,185.3 billion and on January 26th at $8,190.5 billion.
http://www.publicdebt.treas.gov/opd/opdpenny.htm
Yet the US national debt ‘ceiling’, the maximum amount of debt the US government may hold at any one time, stands at $8,184 billion – a full $5.5 billion less. Although called upon by John Snow, Congress has not yet passed an expansion of the debt ceiling and so the US government is now operating in technical default.
You may recall that when last the debt ceiling was approached in the months surrounding the 2004 elections, the Treasury department furiously employed every accounting trick in the book (and then some) to avoid breaching the limit. They even went so far as to take the unprecedented step of borrowing $14 billion from the Federal Financing Bank to cover up the shortfall.
But they never breached the ceiling.
On January 24th they breached it brazenly and openly and with nary an accompanying explanation. Neither have any lawmakers have broached this indelicate subject.
I suppose we could write this off as merely an unsurprising development from a government that no longer bothers to even appear to be adhering to rules, laws and procedures, let alone actually doing so.
But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious ~$70-$80b in Treasury paper will hit the market.
The federal government does not have the legal authority to borrow above the statutory debt limit, which raises the prospect of emergency congressional action to avoid a full-fledged default.
Congress will probably attach a rider to a “must-pass” defense appropriation bill and ironically title it “The Fiscal Responsibility Amendment of 2006”. And if they do, $50 says they do it very late on Friday night.
Since the debt ceiling has been raised 50 times over the past 40 years, hoping for some rational debate on the matter would be an extravagant indulgence. Time spent wishing pigs could fly would offer a far better potential return.
Another odd facet of this story is the deafening silence from the financial press (and I use that term loosely) regarding this matter. Leaving aside the issue of a technical default, one wonders why questions aren’t being asked about the rate of debt accumulation and whether it’s sustainable.
The last debt-ceiling adjustment was $800 billion and was passed in November 2004. Now, on January 24th 2006, it is entirely gone. $800 billion in only 16 months for an average of $50B a month.
Factoring out the plundering of excess social security contributions, the US government borrowed $52B in 3Q05, $96B in 4Q05 and expects to borrow $171B in 1Q06. A trend nearly as mind-boggling as the soon to be discontinued M3 series.
Why do I even bother to pen such distressing factoids?
Because in all my time studying economics I have determined only one thing; there’s no free lunch. Pay now or pay later but pay we will.
Or, more accurately, we hope that our kids will, and not stiff us for the bill. But if they did, who could blame them?
I, for one, would not be shocked.
Use an extreme example... what would happen if the debt were 100 times more than it is? Who, exactly, is the "Repo man" that would start hauling government property away for auction?
As the world economy and the US economy grows, so will the deficit. In fact there would be some bad ramifications to paying the deficit off entirely. That's a different topic.
So yes, we'll get these scary stories about the US going bankrupt unless Congress passes a law every year to make it worse, but it's really just a symptom of growing wealth in this country and nothing really new.
Why can't they just use one of their credit cards ... ???
Every bit of minted and printed money is to be backed by gold and it looks like the govt. either needs to get serious about budget cuts, start $hitting gold bricks, or borrow one of Willy Wonkas golden egg laying geese.
Ok but think of all the air miles we got
I dunno ... is a hyperinflationary spiral really that bad?
This aint what is referred to as being in default. Regardless of what the headline writer thinks.
Well, of course they are going to stiff the Baby Boomers - the moment it becomes more important for politicians to pander to the younger generations. There's no way to keep the promises that have been made by politicians who will be dead long before the bill comes due. I hope people at the tail end of the Boomer generation aren't counting on Social Security, Medicare, or retirement before age 85. ;)
Did we go back to the gold standard and I missed it?
No problem. We announce that the U.S. dollar will be backed by uranium and plutonium, and since we have one helluva pile of that stuff, our financial worries as a nation are completely over.
Keep those fiat money printing presses running. That ought to cover all debts.
Pfft! Hey, the government doesn't have to follow the laws! The government IS the law! And the politicians are above the law!
Laws are for losers... And subjects... And slaves...
Mark
Well, I'm investing heavily in canned goods and shotgun shells!
Mark
Foreclosure!
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