US Debt hits $14T: regime economic advisor – We need MORE!

US Debt

The accumulated US National Debt officially reached $14 TRILLION at the end of 2010 (US Debt Clock). Since October 1, 2007 the government has added $5T in debt. Let me repeat that. In a little over 3 years our government has added FIVE TRILLION DOLLARS to the national debt (story here).

The latest posting today of the National Debt shows it has topped $14 trillion for the first time.

The U.S. Treasury website today reported that as of last Friday, the last day of 2010, the National Debt stood at $14,025,215,218,708.52.

It took just 7 months for the National Debt to increase from $13 trillion on June 1, 2010 to $14 trillion on Dec. 31. It also means the debt is fast approaching the statutory ceiling $14.294 trillion set by Congress and signed into law by President Obama last February.

The federal government would have to stop borrowing and might even default on its obligations if Congress fails to increase the Debt Ceiling before the limit is reached.

Some Republicans in the new Congress have said they’ll seek to block an increase in the Debt Ceiling unless a plan is in place to significantly reduce federal spending and unfunded government liabilities on entitlement programs such as Social Security and Medicare.

So how do you think the regime wants to handle this? By increasing the debt ceiling of course.

White House economic adviser Austan Goolsbee warned yesterday that it would be “catastrophic” if the U.S. Government were to default on its financial obligations.

“That would be the first default in history caused purely by insanity,” said Goolsbee of plans to block an increase in the Debt Ceiling.

Did it ever occur to these “geniuses” that maybe we should stop spending what we don’t have? That this whole thing is f**king insanity? Uh, no. Will the new republican majority finally put the brakes on runaway government spending? I guesss we’ll see but I’m certainly not hopeful. (more here)

During the midterm campaign, Republicans assured voters that they would put an end to the free-spending ways of Barack Obama and the Democratic majority. Now that they have taken control of the House, that fiscal discipline will be put to the test sooner rather than later. Republicans have to draft a budget for the remainder of FY2011 after Democrats failed to do so with large majorities, and that will also mean taking into account the rapidly-approaching debt ceiling. Will Republicans allow more borrowing or hold their ground on demanding deep cuts in government spending instead?

There are two problems here, one short-term and one long-term.  The national debt will rise above the limit increased last year by Democrats at the end of their spending spree in short order, and the question of defaulting on debt service becomes real and could create a lot of economic damage.  However, increasing the debt limit essentially puts off the inevitable, and it also allows Congress to procrastinate on the only long-term solution, which is to cut spending.  Refusing to raise the debt limit would force the federal government to stop spending or create a default, but much of that spending occurs through entitlements — which means that the only real way to meet the current debt limit in the short term would be to severely cut non-entitlement areas, which would probably require significant cuts at the Pentagon.

Look for congress to continue to kick the can down the road on this. They simply don’t have the guts to do what really needs to be done.

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One Response to “US Debt hits $14T: regime economic advisor – We need MORE!”

  1. Hopefully they can at least couple some spending cuts with it, but I expect the same thing as you do- kicking the can down the road…

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