Borrowing Capacity

How much money can the US and the states borrow? There is an upper limit to borrowing capacity. Should we set our limits or just try and find them and hope for the best? What can taxpaying American citizens do to stop the rush to test these limits? Why isn’t our focus on setting limits on our debt and borrowing rather than adding to debt and hoping that we can keep doing so without more calamities?

TheFundamentals has addressed the concept of limits before (see August 3 and 5, 2009.) Limits imposed externally or ex post facto are akin to jail sentences. They come along too late because the damage has been done. Why can’t America impose self control on its addiction to debt? Is this topic worth discussing?

Have you heard a discussion about debt limits? What did the presidential candidates say during the debates about debt limits? What do the platforms of the two political parties say about this issue?

You may visit the Democratic Party Platform at http://www.democrats.org/a/party/platform.html

Go to page 27 to the paragraph entitled “Fiscal Responsibility.” Read it. They blame the prior administration for running up the debt to “over $4 trillion.” Then they spend the rest of the document on their massive spending programs. No challenge to either stop, manage or reduce the debt. The debt number they use vastly understates the US debt. They make no reference to the need to stop adding debt. They clearly do not see debt as a problem. Let’s just repeat that simple fact. THE PARTY IN POWER NEITHER RECOGNIZES THE US DEBT AS A PROBLEM NOR EXPRESSES ANY NEED TO CONTROL SPENDING IN ORDER TO STEM THE RISE IN THE US DEBT. INSTEAD THEY UNDERSTATE THE ACTUAL (see left margin) DEBT.

You may visit the Republican Party Platform at http://www.gop.com/2008Platform/Economy.htm

They have two headings that may be pertinent: Economy and Government Reform. We went to “Economy” first. NOTHING. NOT ONE MENTION OF THE US DEBT. So, next, we went to “Government Reform.” They talk about the spending in excess of tax receipts and the budget process that just keeps on spending and spending without cuts, oversight or review. NOTHING ABOUT THE DEBT PROBLEM. NOTHING ABOUT FIXING THE PROBLEM OR PAYING THE DEBT DOWN.

The party in power (PIP) and the party out of power (POOP) do not create wealth. They do not (and cannot) create jobs or growth.  They have the power to tax and spend but they do not create wealth, jobs and economic growth. They tax it. They tax wealth, payrolls and any and all forms of economic activity. They tax earnings when the income is earned and they tax expenditures when the income is spent. They charge fees to get to work, to fill up the tank with gas, to use the telephone when you try to find a job and they tax the price of the nice clothes you buy to make a good impression on your job interview. They tax the home you live in, the food you eat and the drugs you need to get better. So, if you work, eat, are sheltered, clothe yourself and/or try to get better when you’re sick they get a piece of it. Yet it is still not enough. So they borrow and create debt. And, their appetite for a piece of your income and spending and debt on top of those funds is insatiable. Only you can stop it. THEY DO NOT EVEN RECOGNIZE IT AS A PROBLEM!

The people who are responsible for the financial strength and fiscal responsibility of the US of A have neither the knowledge, experience nor skills to do the jobs they occupy. We must insist that they stop accumulating debt and repay the debt that exists. Self imposed limits on debt are a fundamental.  No one can borrow endlessly.