$Trillions upon $Trillions: Has U.S. Maxed Out its Platinum Cards Yet?
That latest line-of-credit approval will be completely used up by this coming October. Effectively, Uncle $ugar has maxed out another 7,841,000 platinum cards (at $100,000 each) in a scant 12 (or 18) months.
I’ve been thinking about “maxing.” Actually I’ve been thinking about the national debt, Congressional horizons, the 2008 elections, omnibus spending—pork—earmarks, infrastructure deterioration, and sub-prime/alt-A borrowers. Our national debt now hovers at just under $9 trillion. The last $781 billion increase to the ceiling on our national debt was approved by the US Senate in March of 2006. The US House of Representatives “blessed that bump” the following fall just after the 2006 elections. That latest line-of-credit approval will be completely used up by this coming October. Effectively, Uncle $ugar has maxed out another 7,841,000 platinum cards (at $100,000 each) in a scant 12 (or 18) months. That’s a lot of greenbacks!
It took this nation from 1789 to FY (Fiscal Year) 1979 to accumulate the first $800 billion of debt. The second $800 billion was added by FY 1984, the third by FY 1988, the fourth by FY 1991, the fifth by FY1992, the sixth by FY 1995, the seventh by FY 1999, eighth and ninth by FY 2004, and the tenth and eleventh $800 billion bump in our outstanding debt by FY 2007. Now US Treasury Secretary Paulson is putting Congress on notice that another increase is needed by September. Is there any doubt that the fifth increase since January 2001 will be authorized? Will this bump be another $800 billion, or will this jump surpass the magical $1 TRILLION mark?
Now a trillion is a lot of money—even for the US government. But a dollar sign in front of a string of numbers doesn’t seem to faze our government. A current year’s budget (and I use the term “budget” loosely) now runs approximately $2.7 trillion. The currently proposed Defense budget hovers at $460 billion, and this does not include any costs of the warfare in Afghanistan and Iraq. These are running an additional $10 billion a month—equating to roughly $4,000 a second!
Congressional horizons run as far ahead as their next re-election. The dirty secrets of their profligate spending and the escalation of our ballooning national debt should be more than enough to justify their ousters—en masse. They clearly don’t want their lack of fiscal responsibility to be an election/re-election issue, so it is of utmost importance that any further authorization of a deeper hole of US national debt be done far enough in advance of the 2008 election to be forgotten by voters.
Our system of legislating, budgeting, and spending is broken. To secure the necessary passage of legislation, bills are frequently lumped together into big omnibus bills – meaning everything including the kitchen sink is tossed in the pot to get needed voting support. Personal pork projects and earmarked money amendments are a fact of life inside the DC beltway. An average bill runs hundreds (if not thousands) of pages and has not even been read by our elected representatives when they vote for passage. The glitches and wanton disregard for responsible spending only surface subsequently—if at all. These are laughed off and forgotten.
When the Interstate 35 West bridge came crashing down in Minneapolis last week, the spotlight was focused on the dour state of our infrastructure. We learned that roughly 70,000+ of the bridges in our nation are “deficient.” What about our roads, water systems, pipelines, school facilities, and the like? We heard that to fix, repair, upgrade, or replace our declining infrastructure would require somewhere around $1.6 trillion. This is not within the budgets of the federal, state, and/or local governments. Remember that the current Federal budget is already $2.7 trillion. Does this mean more debt?
Being over-extended on debt has become front-page news and weighs heavily on Wall Street, the global equity markets, and the value of the US dollar relative to other currencies. Investment and commercial banks are being left holding the bag on any unfunded mergers. Investors in MBS’s, CMO’s, and CDO’s are looking at billions in losses/writedowns. In this environment, the US government is going to increase the national debt by some 10%? Is Uncle $ugar becoming the planet’s ultimate sub-prime borrower?
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2007 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at firstname.lastname@example.org
Copyright © 2007 The Baltimore Chronicle. All rights reserved.
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This story was published on August 6, 2007.