The Truth About the Debt Ceiling
(Austrian) Economics, Taxation, Vulgar Politics[I just posted this on Google+, but I figured it was worth posting here as well.]
The debt ceiling is just for show; it hasn’t stopped the federal debt from increasing and politicians just keep raising the ceiling when it’s reached.
Failing to raise the debt ceiling will not necessarily result in default. The federal government has plenty of revenue to cover interest payments, even if it must shift that money out of other parts of the budget. Any claims of immediate default and imminent financial collapse are disingenuous fearmongering designed to fool a gullible and economically ignorant public and force an increase of the debt ceiling and an increase in taxes.
Tax cuts are not the reason for the debt crisis — spending is. Spending in excess of revenue is the cause of any debt, public or private. The federal government has been increasing spending with and without tax cuts for a very long time, under both parties.
The CBO’s inclusion of tax cuts as a major source of current and future federal debt is disingenuous. Why?
- Tax cuts are not spending anymore than tax breaks are subsidies (sorry Rachel Maddow).
- All of that estimated debt increase can be eliminated by cutting spending without eliminating tax cuts or raising taxes!
The solution is not to eliminate tax cuts and loopholes, let tax cuts expire, or raise taxes. Increasing taxes, however you do it, will inevitably lead to more spending because governments will find something to spend that increased revenue on and then some.
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