Congress Folds on Debt Limit, Again

This may be a recurring theme that annoys some conservative Republicans, but the Republicans in Washington DC are not going to save us.  Most of them are part of the problem.

Last week, Congress passed legislation not only to extend the national debt ceiling, but to essentially remove the ceiling until next year.  This includes the Republican controlled House, where 28 Republicans defected and supported the legislation.

It is always the same story with a different line.  This time, Republicans will point out that most Republicans in the House and Senate opposed the legislation, but that a few centrists are the ones who helped it along.

But that is just the point.  There are always some centrists who will support the big government legislation.  It is almost rigged in that fashion.

It wouldn’t have mattered if those 28 Republicans in Congress had been Tea Party people.  The House still would have found a way to pass legislation to raise the debt limit.  It would have been the next 28 most centrist Republicans then.

It is all a political calculation.  The Republicans in less conservative districts vote for the legislation, knowing they are less likely to suffer consequences back home.  Meanwhile, the more so-called conservative Republicans can go home and say they tried.

Nothing in substance ever changes.  During 8 years of George W. Bush, the majority of which the Republicans controlled the House, there was barely any opposition to raising the debt limit.  Actually, the little opposition there was, came from just a few people, one of them being Senator Obama.

It is only now that there is a Democrat as president that the Republicans show opposition to massive budget deficits.  But it is mostly talk.  The few “cuts” that are ever enacted are not really cuts at all.  They are reductions in the projected increase in spending, years down the road.  And the so-called cuts, that aren’t really cuts, don’t even take place.

I hear some politicians in Washington DC say that they support an amendment to the Constitution to balance the federal budget.  But if these people were really serious about balancing the budget, then they could just refuse to ever raise the debt limit.  This would automatically force a balanced budget.

The problem here is that politicians will talk about balanced budgets, but don’t have the political will to actually cut major specific programs to get anywhere close to a balanced budget.

At the same time, I can’t keep from laying any blame on the American people.  It is a two-way street.  Americans will overwhelmingly say they favor a balanced budget, but then are reluctant to support any major cuts to their favorite federal government programs.  They are only ok if it is somebody else’s subsidy being taken away.

The reality is that we aren’t going to see a balanced budget because of political action.  We will only see a balanced budget when the laws of economics catch up to the whole situation.

When the Federal Reserve finally faces a situation of high inflation and rising interest rates, it will likely stop buying government debt in order to save the U.S. dollar.  It will be at this point that the federal government will not be able to issue debt at low interest rates, unless China and Japan keep foolishly buying more of it.

When the government no longer has anyone to buy its debt at low rates, then spending cuts will be forced.  Something closer to a balanced budget will happen.

They will probably try to raise taxes, but the American people are more resistant when it comes to increasing taxes.  For this reason, Congress will eventually face making tough spending cuts that will hurt both rich and poor in the short term.

Until that time, we can expect more deficits and a rising debt.  The politicians aren’t going to stop it, regardless of which party is in power.