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Debt Ceiling Raised 74 Times Since 1962 -- Spending Out of Control for Decades

By Eric Crane -- Your Full Service, Discount Fee Realtor®

Real Estate Agent with DPR Realty LLC

July 31, 2011 06:16 AM

Debt Ceiling Raised 74 Times Since 1962 -- Spending Out of Control for Decades

According to the Congressional Research Service, the federal debt ceiling has been raised 74 times since March 1962 -- and ten of those times since 2001.

Let that sink in, folks. What does it mean to have a debt 'ceiling' if every time you reach it, you simply raise the ceiling? When do we finally start paying down the debt? When do we have a national discussion on what our spending priorities should be?

Of course Congress will find a way to raise the ceiling again this week. But understand this -- it doesn't solve the problem. It is a symptom OF THE PROBLEM. The problem is a multi-decade pattern of over spending.

The federal debt is more than 14 trillion dollars -- not even counting the long-term liabilities for entitlement programs like Social Security and Medicare. Here's the real crime: so far this fiscal year (as of June 30th 2011), the government has made interest payments of approximately 386 Billion Dollars on the National Debt. For the full year we are on pace to pay more than one-half Trillion dollars in interest. To put this into perspective, NASA's entire budget is 6 Billion Dollars. We could fund almost 100 NASA's with the money wasted because of our indebtedness.

Think about all the important things this money could have been used for! When a family is choking on debt, their discretionary income goes down. That is the simple math. When you are paying too much in interest, then you have less dollars for managing your household, or sending your kids to College, or taking a vacation. That is the simple reality and it is no different for a government.

Please note: an enormous amount of money is being wasted with interest rates at historic lows. What happens when interest rates go higher? Do you know that even a small increase in the government's borrowing costs could easily wipe out whatever spending cuts are being debated in Congress right now?

We need DEEP, MEANINGFUL CUTS RIGHT NOW to avoid downstream catastrophe. The plans being debated in Congress are a joke. It's like having a leak in a rowboat and trying to bail the water out with a thimble.

There is only one silver lining that I see in all of this. It wasn't all that long ago that if I spoke about the debt ceiling or the Federal Debt, I would see people's eyes glaze over. Few people seemed to care. Now the entire nation is captivated by the debate. The first step toward change is RECOGNITION -- and that is what we finally have. More people than ever recognize that we are no longer on a sustainable path. The debt is now crippling us and if we continue down this road it will bankrupt us.

My Solution

Because of the deep, philosophical divide regarding whether we should raise taxes or cut spending, we are unlikely to structure a plan that gets us where we need to be.

My solution is to embark upon a strategy that will significantly grow our economy -- that is an approach that will naturally grow tax revenues. (When individuals and corporations are making more money, they generally pay more net dollars in tax. When there is a roaring bull market in stocks, individuals and corporations pay more in capital gains taxes, etc. In other words, don't increase the tax rate, but grow the size of the entire economy).

How to do it? Create tax incentives that will allow entrepreneurs to form the businesses of tomorrow -- which in turn will create job and bolster consumer confidence. We can not compete against the developing world when it comes to commoditized, low-margin goods -- because our labor costs are too high. Rather, we must focus on cutting edge, high margin technology.

In my opinion, America must re-invigorate the manufacturing sector and decide to become the leader in the industries of tomorrow. Some examples:

Alternative Energy
Green Technology
Biotechnology
Medical Devices
Advanced Transportation Systems
Information Technology
Space Exploration

The entrepreneurial spirit in America is not dead -- UNLEASH IT!! That is our pathway out of this mess. That is the road to our future.

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The Author, Eric Crane, is a Realtor in Greater Metro Phoenix Arizona. You can reach Eric at 602-327-8475 or by email at ericcrane@hotmail.com Visit Eric on the web at www.JustAskEric.com

Debt Ceiling Raised 74 Times Since 1962 -- Spending Out of Control for Decades

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Lisa Von Domek

Lisa Von Domek Team - Dallas, TX

....Experience Isn't Expensive.... It's Priceless!

Good morning Eric,

Many good points in your blog and producing more revenue is great; however, we have to fix the spending problem first...Washington is broken and any new money the are given, they will find ways to spend it. It's just a vicious cycle.

Jul 31, 2011 06:19 AM

Eric Crane -- Your Full Service, Discount Fee Realtor®

DPR Realty LLC - Gilbert, AZ

Greater Metro Phoenix Arizona

Hi, Lisa -- I agree with you. Deep and meaningful spending cuts. I'm just afraid that the philosophical divide is so great, that they won't do it. Have a great Sunday!

Jul 31, 2011 06:22 AM

Mike Carlier

Lakeville, MN

More opinions than you want to hear about.

In my overtaxed state of MN, I once attended a state legislator's town hall meeting. I suggested to the (Republican) state representative that Minnesota could double the state's income tax revenue easily, and that I was in favor of doing it. All we have to do is double the income of our citizens. He never did get it -- I guess he's in the right job.

Jul 31, 2011 06:23 AM

David Shamansky

US Mortgages - David Shamansky - Highlands Ranch, CO

Creative, Aggressive & 560 FICO - OK, Colorado Mtg

It is very complex to those in Washington byt very simple to everyone who runs a budget... Spend less than what you make!! Just because its NOT YOUR MONEY, you are still entrusted to watch over it and put those revenues to use. Paying off those who donated to campaigns and pulled strings to get you there will NEVER solve a problem only add to it. When Washington acts and behaves as they speak and tell everyone else to you "might" start seeing change, until then it will be business as usual unless enough voice their opinions, DONT re-elect those there and perhaps if China and others dont keep giving us money to continue this path to destruction (which very well may be part of a bigger picture) that will play a major role too.

Wake up America we DONT have to take this we have a vote we have a voice we have the ability for action. We are on very dangerous ground and TRUE leadership and TRUE change is needed not just the talk BUT ACTION!

Jul 31, 2011 06:24 AM

Eric Crane -- Your Full Service, Discount Fee Realtor®

DPR Realty LLC - Gilbert, AZ

Greater Metro Phoenix Arizona

Mike -- bravo -- the average Realtor 'gets' it because we are independent business people and understand that you spend money where you have a return on investment. Grow the size of the economic pie!

US Mortgages -- you have made so many important points -- thank you. Everyone should think very carefully about your point that our creditors (like China) might finally say, 'enough is enough'. At that point, decisions start to get made FOR US, instead of BY US. We have got to get control of this process before it is too late.

Jul 31, 2011 06:28 AM

C. Lloyd McKenzie

Living Albuquerque - Albuquerque, NM

Living Albuquerque

Eric a very thoughtful post.

Here is my perspective: Debt financing is actually not a bad thing for individuals, companies or countries. Let's take this back to the beginning of the Reagan Administration. I was an Economics Student at Fairfield Unversity, and I remember debating the merits in favor of military expansion if we set a timeframe to payoff the debt associated with the expansion. It never happened. Time and again our politicians who are bought off by special interests, skew the laws in favor of these groups, sometimes to the detriment of the country.

However in the current debate, the people who are yelling the loudest are brain-washed into thinking if you yell or repeat a stupid idea over and over again, everyone will accept it as a good idea. The idea that Voodoo Economics can solve the nation's economic problems is very problematic. They claim to be fiscal conservatives, but they are sadly out of touch. These are the same people who during the past 8 years under the Bush Administration said...deficit didn't matter. You tell me how they were able to finance the Medicare Part D, the two wars, the trillion dollar tax cut for the "job Creators at the same time, now they are wondering how we got here. They wasted approximately 2 trillions on the wars, 400 billion on the Prescription Drug Bill, and another one trillion on the Tax cut. We need reform our congress, election laws, get rid of NAFTA, and all the other anti-american bi-lateral agreements, Implement a new Energy policy, start with what I describe as the General Motors' Model and look seriously at some of the ideas that you have suggested. We have to start making things again. Like I said in my blog, BUILD AMERICA, BUY AMERICA.

There is no reason why the IRS should be sending REFUND checks to any CORPORATION. Imagine an Oil Company receiving $157M in tax return. That is preposterous. We need to create some more GM's in this country where the pay their fair share of taxes and kick out all the criminal criminal enterprises, diguised as legitimate corporations that offshores moneys out of the reach of the federal government. Lets cancel all government contracts non-american companies to start. Let's see who first will challenge our laws. They are here to plunder and steal the wealth of America. It is high time for a "New America"

Jul 31, 2011 06:19 PM

Eric Crane -- Your Full Service, Discount Fee Realtor®

DPR Realty LLC - Gilbert, AZ

Greater Metro Phoenix Arizona

Hi, Lloyd -- thanks so much for reading the blog and weighing in with your thoughts. You are right that a certain amount of financial leverage (debt) is not necessarily a bad thing -- if it can be used wisely (i.e. produce a good return on investment).

Also, it is understandable for our government to be the lender of last resort during a crisis. The problem is that in good times, they don't run a surplus. So they are ill equipped to be the the lender of last resort when something goes wrong. They are digging a ditch at all times -- good and bad.

As you point out, much of our spending has been wasteful. In looking at the highlights of the plan that are coming out tonight on the cable news channels, the cuts are not getting started until 2013. If that is the case, I fear it is just more of the same. They will keep to their crazy spending and the cuts are always 'downstream'. Then 'stuff' happens which causes the government to abandon cuts and spend even more. It's always 'after the next election' or whatever. Have a good week.

Jul 31, 2011 06:34 PM