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

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.    

© 2011 Eric S. Crane.  All Rights Reserved.

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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