Federal government should get serious about spending cuts

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Jaime Chong/Staff

For the past few months, Secretary of the Treasury Timothy Geithner has been warning Congress about the country’s imminent arrival at the $14.3 trillion national debt ceiling, casting a dark cloud over our nation’s capital.

Geithner foresees doom and gloom if our legislature neglects to raise its spending limit, claiming that such a failure would cause the country to default on its debt and have “catastrophic economic consequences that would last for decades.” Indeed, Geithner’s alarm has an almost apocalyptic feel to it, even featuring an end date like all good doomsday prophecies.

Aug. 2 is when the devastation supposedly begins, as the Treasury is set to run out of accounting tricks by then. While the clock ticks towards the big date, pundits and politicians are debating whether these frightening reports are justified. Will the economic apocalypse arrive on Aug. 2 if Congress does not raise the debt ceiling? Or, is this doomsday date just as inaccurate as Family Radio’s recently failed prediction of the Rapture?

Sadly for the secretary, the facts point to the latter case. While it is true that our nation would be in deep trouble if it were to default on its debt, such a scenario seems unlikely given the vast amount of tax revenue the federal government collects each year.

Washington is projected to rake in $2.2 trillion in taxes this year, which leaves nearly $2 trillion to spend after making $244 billion in debt interest payments to its creditors. Thus, as long as the government slims its expenses down to this $2 trillion magic number, it will not default. Currently spending $3.8 trillion in 2011, adopting such a strategy would certainly necessitate big cuts. However, the slashes would be nowhere near the cries of anarchy that opponents will make. In fact, the Feds operated on an inflation-adjusted $2 trillion budget only 11 years ago.

Thus, it is clear that the government has sufficient resources to start making a dent in the debt — it simply needs to gain the political will to make the necessary cuts. Indeed, all this chatter about raising the debt ceiling distracts from the real root of the problem: excess government spending.
As the debt debate rages on in the upcoming weeks and months, we must remember that the ceiling is only a symptom of our nation’s ailment, not the illness itself.

Rather, the problem is our government’s spending addiction. Common sense dictates that cutting expenditures when in debt is the right route to a sound fiscal policy. Unfortunately, politics is not a sensible game. Instead, too many of our politicians are hell-bent on raising the debt ceiling, paradoxically believing that raising spending is the first step to lowering spending. History, however, proves them dead wrong.

Our current political situation is by no means the first time Congress has neared the debt limit, nor is it the first time it has proposed raising it. Rather, the ceiling has been lifted a whopping 74 times since 1962, with 10 of those times occurring in the last decade. From these daunting statistics, it is clear that Congress has not taken its spending limit seriously, viewing it rather as a small speed bump in its debt-drunk drive to bankruptcy.

Meanwhile, the bills have only piled up with no signs of reversal. Some believe the debt could reach an incredible 85 percent of gross domestic product by the end of the year and would skyrocket to an unprecedented 800 percent by 2050 if current trends continue. Though the risk of defaulting may send chills down our congressmen’s spines today, this danger will only become real if they continue to put off the problem for a future date when we actually cannot pay the bills.

Thus, it is clear that our government must get serious about tightening its belt. The manner to do so is certainly not to raise the debt ceiling, which history has only proven to encourage further spending. After all, “doing the same thing over again and expecting different results” is Albert Einstein’s definition of insanity. Rather, fiscally responsible congressmen should respect the debt ceiling’s purpose by refusing to raise it once again.

Recently, Congress has exuded such respect, with a vote to raise the limit by $2.4 trillion having overwhelmingly failed on the House floor last week. However, this small success seems fleeting. Secretary Geithner and President Obama’s scaremongering will likely ensure the ceiling to be raised again before August.
If only our congressmen would ignore President Obama’s alarmist rhetoric and instead listen to the levelheaded reasoning of Senator Obama, who voted against a debt ceiling raise in 2006.

The fiscally sensible senator proudly opposed raising the limit back then, declaring that “the fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.” My thoughts exactly, Mr. President.

Casey Given is a co-founder of Students for Liberty on campus.

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  • bill topolsky

    Here in DC, I have read about the debt crisis in California and its effect on state
    universities and public schools.  But I don’t seem to notice any mention that this debt
    is due to the intermnable, unending  murder of foreigners by our government.  The current (2011) Budget for the Pentagon, including Iraq and Afghan. is $740 Billion.  That costs the taxpayers of California $81 Billion.  A year.  The budget for CIA and 15 other spy
    agencies is $80 Billion.  California taxpayers’ share $9 Billion.  The VA budget is $140
    Billion.  California’s share $15.4 Billion.  VA budget for Veterans Home Loans is $45
    Billion. California share $5 Billion.  Interest on the National Debt for all foreigner -
    murder for the past 65 years is approximately $200 Billion.  California taxpayers pay
    $22 Billion.  A year.  Every year.  Add DOE budget for upkeep and research on new
    Hydrogen bombs, Department of State, AID, Justice Department (Guantanamo and
    Black Prisons in Romania, Poland, Turkey, Morocco and in many other countries),
    NASA Weapons in Space, and all of the other weapons and costs of the Department of
    Offense, amount to at least $700 Billion.  Thus the Offense budget and Department of
    Defense budget come to at least $1 Trillion, 400 Billion a year.  California’s share: at
    least $155 Billion. 

    sincerely,
    bill topolsky
    International Education Exchanges
    Washington, DC

  • http://www.facebook.com/brad.dv Brad Voracek

    Casey, I believe you have a terrible understanding of how our economic system actually works. You say, 
    “While it is true that our nation would be in deep trouble if it were to default on its debt, such a scenario seems unlikely given the vast amount of tax revenue the federal government collects each year. ”
    which isn’t just unlikely, it is impossible. The United States is an autonomous currency issuer, which means it is impossible for the United States to default. That’s right, we can just print more money. Now this doesn’t mean we can print as much money as we want, it just means that our real worry should always be inflation not solvency. We CANNOT default. This also means taxes are NOT revenue. When the government takes taxes that money is deleted from existence. the US government of today SPENDS money into existence, and TAXES money away. 

    You say
    “Common sense dictates that cutting expenditures when in debt is the right route to a sound fiscal policy. ” but this is only common sense if you are a household. If you are our government, every dollar in your deficit is a dollar that exists in the economy. If the US government were to STOP spending money, then the economy would contract and private savings would deteriorate. This is exactly what happened when Clinton balanced the budget, and why he was afraid of doing it! (
    http://www.npr.org/blogs/money/2011/10/21/141510617/what-if-we-paid-off-the-debt-the-secret-government-report ). 

    “Thus, it is clear that our government must get serious about tightening its belt. ”
    Hopefully you understand by now that this quote too is wrong, in fact a recent paper by Brad Delong of UC Berkeley and Lawrence Summers of Harvard makes the argument for more government spending in a depressed economy. Through it they show that fiscal policy when interest rates are low pays for itself. (
    http://www.brookings.edu/economics/bpea/Latest-Conference/delongsummers.aspx ) Obama’s original stimulus wasn’t large enough, because he was forced to compromise with Congress. 

    The real problem right now is there is no demand. Companies are sitting on record profits but not spending more money, because there is no demand. To raise demand we need JOBS and EDUCATION. While the american public continues to believe we have to “tighten our belt” this will only lead to further cuts in the areas that desperately need spending and reform the most. We need to change the rhetoric.

  • Eric Hondzinski

    Do you know how much 1.8 trillion dollars is? Hell, to reach that figure you would have to do some heavy wreckage to both the defense budget and medicare, and good luck gathering the political consensus to do that.

  • http://www.facebook.com/unprecedented Elliot Goldstein

    The truly rational way of thinking about our national debt is not the absolute value of it, but the debt-to-GDP ratio: http://www.usgovernmentspending.com/federal_debt_chart.html

    Following WWII our Debt-to-GDP ratio was over 120%, however we came out of the war in a booming economy and saw this ratio decrease even though the absolute value remained high.

    Today our “recovery” is sluggish and the real problem facing our economy is UNEMPLOYMENT not the deficit! We lost nearly 3 million jobs in the last four years and the government should be focused on raising employment in order to get the economy growing at a pace that will begin to reduce our Debt-to-GDP ratio. Therefore cutting the budget in discretionary spending will undoubtedly increase unemployment and make the recovery slower still.

    When you say, “In fact, the Feds operated on an inflation-adjusted $2 trillion budget
    only 11 years ago.” I ask you what you propose cutting? Student’s pell grants? Subsidized loans to students? Medicare? Medicaid? The Earned Income Tax Credits to the poorest workers? Military Spending?! (Hardly.) So what then? This op-ed makes a call to arms without a plan of action to follow through and therefore is a dangerous discourse that hurts the students who read this newspaper.

    It’s easy to go with the tea party tide of deficit cutting frenzy, but the victims of these policies are the middle and low classes who are the people who suffer from austerity!

  • Anonymous

    Well, actually Casey, no.  History tells us exactly the opposite, and you and your “non-partisan political student organization” and its big-money cronies know it does.

    Chris Hedges says:”When a currency goes down, all traditional systems of power are discredited.”

    Have you thought this through, Casey?  No need to, I guess.  When the U.S. economy is wrecked and the currency goes down, you’ll scurry off to your gated compound, safe from the starving riffraff.

    • http://www.facebook.com/jeff.yunes Jeffrey Yunes

      Hi BronwenRowlands,
      I’m having difficulty finding meaning in your comment. How does history tell us exactly the opposite? What influence do you think big-money cronies have over the libertarian students at Berkeley? What are you trying to show with Hedges’s quote?

      Could you please explain why you think that reduced government spending would wreck the U.S. economy and the value of the dollar (or conversely, why increased government spending is the best thing for them)?

      Thanks!
      -Jeff

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