The Federal
Debt Spiral
by Rep. Ron Paul, M.D. (R-TX)
June 3, 2003
The administration held a grand signing ceremony last
Wednesday to celebrate the tax cut bill, a marginally worthwhile piece of legislation that
does reduce income taxes slightly. The East Room of the White House was awash with cabinet
members, Congressmen, Senators, administration staffers, supporters, and news media of
every kind, all gathered for a perfect political photo-op.
One day earlier, however, the President signed another
bill into law without fanfare of any kind. There was no press conference, no cameras, and
no ceremony whatsoever. In fact, the White House issued only the briefest comment on this
particular bill, even though it affects the American people far more than the modest tax
cut bill. The reason for the silence? The President had just approved a whopping $984
billion increase in the national debt, the single-largest increase in our nation's
history. This was hardly a proud moment for the President or Congress, so the White House
understandably kept the whole matter very quiet.
For perspective, this latest debt limit increase of
nearly one trillion dollars is as large as the entire federal budget in 1985. The
embarrassing increase was necessary because federal law limits the amount of debt the
Treasury can carry, and the current $6.4 trillion limit had been reached. The federal
government across the board has been spending money feverishly, at levels approximately
22% higher than just three years ago. This spending spree caused Congress to raise the
debt limit from $5.9 trillion only six months ago, but the new limit was quickly reached. (Ed—Incredibly, the Wall Street Journal,
quoting Treasury spokesman Rob Nichols, reported in its June 17 issue that the new limit
of $7.384 trillion could be reached as early as next Spring!)
Debt simply has lost any remnant of stigma in
Washington. The point of the debt limit law was to shine a public light on government
borrowing and make lawmakers more accountable for deficit spending. The original intent
behind the law - to limit borrowing - has been abandoned. Today Congress can raise the
debt limit at any time with virtually no media attention.
More importantly, there is no political fallout. This puts Congress in the
position of a spendthrift debtor who can authorize spending limit increases on its own
credit card!
The House managed to avoid a direct vote on raising the
debt limit, instead burying a series of automatic debt increases in the terrible 2004
budget passed in April. The Senate, by contrast, at least held an up-or-down vote on the
issue. Yet only one Republican Senator voted against saddling the American people with
nearly another trillion dollars of debt. Both parties in Congress clearly now view the
debt ceiling law as purely symbolic at best. Privately, most members probably view it as
an unnecessary obstacle that should be eliminated, an opinion shared by Federal Reserve
Chairman Greenspan.
After adjusting for the new debt limit, our national
debt jumped $107 billion last week. It has risen $538 billion in the last year alone. The spending problem is deeply rooted in
Washington bureaucratic culture, and no administration is immune. The President can set the tone for fiscal
restraint or fiscal indulgence, but ultimately Congress controls the purse strings though
the appropriations process. One thing the
President can do, however, is refuse to sign spending bills or debt limit increases. When
neither Congress nor the administration is capable of fiscal self-control, the taxpayer is
always the loser.
How do you feel knowing the federal government just
wrote itself a trillion dollar loan using your labor as collateral?
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