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Raising the debt ceiling

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By RICK BERMAN

Special To The Tampa Tribune

Published: November 2, 2009

In 2006 Congress was debating whether to authorize increasing the size of the national debt. A freshman senator addressed his colleagues: "The fact that we are here today to debate raising America's debt is a sign of leadership failure."

Three years later, a couple of things are different. That senator is now President Barack Obama, and the national debt is nearly 50 percent larger than before. At least one thing hasn't changed, however - in the coming weeks the Senate is expected to vote on yet another increase in the federal debt ceiling.

Just last Friday, the White House announced the deficit for fiscal year 2009 was $1.4 trillion. At 10 percent of our gross domestic product, that's the greatest amount of borrowing since 1945.

For too long, Washington has paid lip service to addressing the federal debt problem. Congress spent what it wanted, borrowed what it didn't have and raised the debt limit whenever someone at the Treasury Department complained.

But ignoring the debt has become all but impossible. Exploding interest payments of $500 million a day, shifting demographics, nervous foreign lenders and a sea of red ink all threaten to overwhelm our nation's financial structure.

Anyone with a credit card balance knows that rolling over debt is expensive. And when you have $12 trillion on your Visa, things get tricky. In the last year the federal government has paid nearly $200 billion in interest. In 2019 the White House expects those annual interest payments to be $774 billion - more than the government is projected to spend on national defense.

In the next decade, Washington is slated to pay $4.7 trillion in interest. That's $53 million for every hour of every day. Imagine what that money could do if it were invested in schools, infrastructure or medical research.

For decades, the cliched admonition was that federal borrowing was "mortgaging our children's future." But the problem is no longer one we can leave to our children. The debt is a crisis for everyone today. And its effects reverberate even in our foreign policy.

Foreign lenders have advanced us more than $3.4 trillion. We owe China about $800 billion. They are so worried about our ability to repay that President Hu Jintao personally asked Obama to guarantee our borrowing would be repaid in full. We continually refinance much of the debt, issued in short-term Treasury bills that mature in a few days or months.

Debt optimists point out that our borrowing during World War II was greater than today (relative to the size of the economy). What they neglect to share is that the borrowing came at great cost to America.

Millions of families scrimped to buy war bonds to ensure the government had enough money. We endured food rationing to ensure soldiers had enough to eat.

That's not to condemn all our current spending, of course. But "stimulus" bills stuffed with no-bid contracts and ego-driven boondoggles are an insult to taxpayers, and they anger the citizenry more than is even rational.

But politics aside, authorizing more borrowing is not a solution to national debt, just like buying bigger pants is not a solution to obesity. Barack Obama concluded his speech in 2006 with three simple words: "Americans deserve better."

Here are three of my own: Yes, we do.

Rick Berman is executive director of the Employment Policies Institute, a nonprofit research organization dedicated to studying public policy issues that affect the American economy.

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