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Debt Ceiling Déjà vu

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Two days ago, President Trump sent out a tweet crowing that the national debt went down by $12 billion in the first month of his administration, as compared to the first month of the Obama regime, when it went up by $200 billion.

If Trump really believes that he is responsible for that reduction in the amount of the national debt, we are in much bigger trouble than everyone thinks we are. But if he didn’t really believe it, why would he say it?

The debt ceiling debate is upon us once again. The total amount of the federal government’s debt — currently $19.979 trillion and climbing by the second — is about to run up the maximum amount permitted by law.

The debate will revolve around whether Congress should raise the debt ceiling again, in order to permit the feds to borrow even more money into the future and add to their already existing level of debt.

If all this sounds familiar, it’s because every time Congress is faced with this issue, it caves and lifts the debt ceiling again and again. That’s how the amount of the federal debt has reached almost $20 trillion dollars.

That debt is real. The federal government owes real money to real people and real entities who have loaned their money to the government.

The problem, of course, is that it’s not federal officials, including Trump, who will be paying back creditors with their own personal funds. Instead, it is taxpayers who will have their money taken from them by the IRS in order to pay off the creditors.

What is each taxpayer’s share of the federal debt? According to usdebtclock.org (a website worth looking at but be prepared to be stunned), the amount each taxpayer currently owes is $166,751. So, if you’re married, you and your spouse have a current liability of $333,502.

What would you do if the IRS came asking for its money and imposed a lien on your house to ensure payment?

Why is there so much federal debt? The answer is simple: U.S. officials spend more money than they receive in taxes. When you spend more than what you’re making, you have to borrow the difference.

This has been going on for a long time. They just keep spending, knowing full well that they lack the tax revenues to cover it all. That’s how the federal debt has continued rising, year after year.

What if federal expenditures were suddenly slashed so that expenditures matched tax revenues. That would mean that the total amount of the debt would still remain at $19.979 trillion. It would still have to be paid. Every taxpayer would still be on the hook for it. But at least it wouldn’t be growing.

What happens if the debt ceiling isn’t raised. That means that the federal government has now incurred the total amount of debt it will be permitted to incur. It will not be permitted to add any debt to its already mountainous existing debt.

That means that federal officials will necessarily have to slash expenditures so that expenditures equal tax revenues.

Take my word for it: We are about to hear all sorts of Chicken Little scenarios from statists in the weeks ahead, as the debt ceiling is approached. “Oh, we can’t afford to shut down the federal government!” “Oh, we can’t afford to default on the national debt.”

But notice something important here: It’s not necessary to shut down the federal government or default on the national debt. All that is necessary is to slash expenditures to the point they equal revenues.

How can that be done? Any number of ways, but especially by ending the illegitimate functions of the federal government.

For example, legalize drugs and end the war on drugs, enabling a layoff of DEA agents and others in the drug-war bureaucracy. Or bring the troops home from the Middle East, Afghanistan, Europe, Korea, Africa, Latin America, and elsewhere. Close all foreign military bases and most domestic military bases. Abolish the CIA and the NSA. Dismantle America’s Cold War era military industrial complex. Dismantle HUD, Homeland Security, the Department of Education, Department of Commerce, and other welfare-state agencies. Abolish Obamacare, Medicare, Medicaid, and Social Security, foreign aid, education grants, farm subsidies, and other welfare schemes.

So, you see, it is possible to slash expenditures. The problem, of course, is that the members of Congress and the recipients of all the federal largess don’t want to let go of all their  political dole. They just wring their hands, keep spending, and keep hoping.

And what are they hoping for? “Growth!” That’s always the magic word for big spenders. What it means is that they are hoping that taxpayers work harder and produce more so that they’ll send more taxes to Washington, thereby obviating the need to slash spending. Happy days would be here again with taxpayer working harder than ever and federal coffers overflowing.

But it’s not going to happen. The system is starting to implode in on itself, just as it has in Greece and Puerto Rico and some American cities. At some point the debt becomes so huge that taxpayers simply cannot handle the burden of paying such high taxes.

Today, many young people are having a horribly difficult time making ends meet. Hardly anyone saves money anymore. Yet, savings is the key to productivity, which is what produces “growth.”

Two years ago, during the last debt ceiling debate, I predicted that if Congress were to cave again and permit federal officials to continue borrowing more money, not one big spender would then say, “Well, we now have to slash spending because two years from now the same thing will happen again.”

See my article on the debt ceiling debate of two years ago here.

Needless to say, my prediction came true. As soon as the debt ceiling was lifted, big spenders went out and laughed and celebrated over the fact that they had done it again — pressured and scared Congress with their Chicken Little scenarios into raising the debt ceiling.

And then for the past two years, not one of them have said: Time to slash spending so that expendiures equal revenues before we reach the next debt ceiling.

So, here’s my new prediction: It’s going to be déjà vu all over again. The big spenders are soon going to hit us with all their Chicken Little scenarios. “The sky is falling! The sky is falling! We need to raise the debt ceiling again to prevent the sky from falling all the way.”

And here’s my other prediction: As soon as the debt ceiling is raised, the Chicken Little criers will laugh and celebrate, and not one of them will  call for a slashing of federal expenditures in preparation for reaching the next debt ceiling a couple of years from now. And so the fiscal problem will only get worse.

The best thing that Congress could ever do is refuse to lift the debt ceiling, which would force the feds to slash federal expenditures.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.