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No Debt Ceiling Debate in the Presidential Race


Among the many issues not being debated in the presidential nomination races in both political parties is the matter of the debt ceiling, which both political parties continue to raise each time it is reached. Given that the debt ceiling is an acknowledgment that too much debt is a very bad and very dangerous thing for a government and a nation (See Greece and Puerto Rico), wouldn’t you think that this would be something that would be discussed and debated in the course of a presidential race? Well, apparently not in this one.

Check out this website, which is called the US Debt Clock.org. It shows that the national debt currently stands at $19 trillion. The amount of that debt allocated to each citizen is $59,150.

Advocates of ever-growing federal spending have long maintained that the national debt doesn’t really matter because “we owe it to ourselves.”

It would be difficult to find a more inane statement than that in the annals of history.

The fact is that the government owes all that money to people who own U.S. government bonds and other U.S. debt instruments, including foreign regimes like communist China, which loaned the George W. Bush regime the money he needed to invade and occupy Iraq.

There is one big problem: The U.S. government doesn’t have a giant pool of money that it has saved up to pay what it owes. That means that in order to pay bondholders, including the communist regime in China, what it owes them, the U.S. government must extract the money from the American people.

That’s what taxation is all about. Here is the reality: If the government were to pay off all its debt, it would have to seize and confiscate an average of $59,150 from each citizen. Take a family of four: That would amount to $236,600.

You don’t have that much in savings, you say? Well, let’s add up all your retirement accounts and the equity value of your home. That should get you closer to your share of what the government needs to cover its debt.

What about all the money that the government borrowed? It’s gone. Spent. Poof. You don’t think that the national-security state’s invasion, assassination, and killing machine in the Middle East comes for free, do you? Troops have to be paid. So do “defense” contractors. So do the armaments manufacturers. Don’t forget all the suppliers to the death machine. Everyone, no matter how patriotic, demands to be paid for his service to the national-security state’s death machine.

There is something else everyone should understand: That $59,150 that each citizen owes doesn’t cover what he also owes — and will continue to owe — to seniors for Social Security and Medicare. Ditto for Medicaid recipients. And the same for recipients of education grants, food stamps, farm subsidies, foreign aid, and all the other recipients of welfare largess.

All that money has to be paid too. The reason it isn’t carried on the books as part of the government’s debt is that its welfare, not a bond. Theoretically, a welfare program can be repealed today and so it’s not a legally binding debt. But as a practical matter, as long as the program continues, the money has to be paid. And every American citizen is on the hook for welfare “entitlements” and the federal government’s $19 trillion debt.

The debt ceiling places a limit that the Congress has imposed on the amount of debt that the federal government is permitted to incur. Once that limit is reached, no more debt is permitted. That means that the federal government must then operate on a cash-and-carry basis. It cannot borrow to cover any of its expenses. That would necessarily mean a major slashing of welfare-warfare state expenditures.

Whenever the debt ceiling is reached, it throws every statist in America into apoplexy. That’s because federal government continues to spend more than what it brings in with taxes. How is the government supposed to pay for the excess welfare-warfare expenditures if it’s not permitted to borrow the money? the statists ask.

It never occurs to the statists that there is a simple answer to that question: Slash expenditures to such an extent that expenditures equal tax revenues.

Statists exclaim, “We can’t do that! The national security state and its death machine must be fed. The welfare recipients must be fed. Everyone must be fed. We have to just keep spending and borrowing, spending and borrowing.”

But there is no “must” about it. It is all about making choices. Americans choose to keep the death machine going. They choose to keep the Cold War-era national-security establishment in existence. They choose to keep Social Security and Medicare intact. They choose to continue the welfare-warfare state apparatuses when they could repeal, dismantle, and repeal and or all of them.

When the debt ceiling was reached the last time — and every time before that —t he statists, including the mainstream press, screamed like banshees about how it was necessary to raise the ceiling again in order to permit new debt. They claimed that to comply with the debt-ceiling law would entail “shutting down the government,” as if abolishing unnecessary parts of welfare-warfare state apparatus would mean “shutting down the government.”

Notice something else important: Ever since the last time the debt ceiling was raised, not one single statist, including all the presidential candidates, the mainstream pundits, and the debate moderators, has called for slashing federal expenditures so that expenditures equal tax revenues before the next time the debt ceiling is raised. Instead, they have endorsed current levels of spending or even expanded levels of spending, especially for Social Security, Medicare, and Medicaid recipients along with the military and its death machine.

The American people innocently proceed with their lives, believing that there is no real possibility that the government will ever make them fork over the money to pay its debts and welfare expenditures. They forget that the federal government seized everyone’s gold in the 1930s. They forget about all those juicy retirement accounts that are just sitting out there ripe for an emergency seizure, just as the Argentine government did to Argentina citizens. In a crisis in which government is desperate for money, the government will do whatever is necessary to get its hands on people’s money.

Not surprisingly, nobody discusses the issue until the next time the debt ceiling is reached, and then the entire circus starts over. “We can’t shut down the government! Please, please, one more time — lift the debt ceiling one more time so that the federal government can continue spending whatever it wants. Don’t worry — we owe it to ourselves!”

And so the government plunges ever deeper into debt. Just like Greece and Puerto Rico.

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.