Economics and Government

According to a recent article I read, most of the incoming freshman class of 85 republicans ran their campaigns promising to lower the federal deficit and stop “big government spending” while also slamming their opponents for previously raising the federal debt limit. Now many of those same freshmen are calling the idea of raising the debt limit further awful and many are hoping congress does not soon vote to raise the debt limit even more.

Of course it may seem like a good idea to them to take a stand against further increases in the federal deficit, after all they will be living up to their campaign promises. But considering the federal deficit in 2009 was about 1.4 trillion dollars, or about 41% of the total federal government spending, not increasing the deficit limit would mean that at some point in the next year the government will lose a huge portion of their revenues and the question will become, how do we pay for government programs on 40% less revenue.

No one wants to be responsible for telling the American people that we’ve suddenly stopped funding the U.S. military and Social Security, which together account for about 43% of spending. So ultimately congress is going to have to raise the debt limit as a short term fix, so long as there is continuing debate about how to deal with the deficit. Congress currently seems content on both leaving tax rates the same (by extending the bush tax cuts) and not cutting too much spending (because no one can agree on what to cut), so something is going to have to happen and absent making the really tough choices of actually cutting spending or raising taxes…or both, the deficit isn’t going away.

http://www.csmonitor.com/USA/Politics/2010/1118/Poison-vote-looms-for-tea-party-freshmen-Raise-the-national-debt-limit

http://en.wikipedia.org/wiki/File:U.S._Federal_Receipts_-_FY_2007.png

http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2007.png