Blowing Through the Debt Ceiling

November 17, 2004

Since President Bush took office, he and his Congressional allies have sent federal deficits spiraling into the stratosphere. Their spree of tax breaks for the wealthy and the cost of the preemptive war in Iraq have saddled future generations of Americans with massive amounts of debt. Now, for the third time in four years, the administration and Congress have blown through the legal limit of the amount of debt the federal government can accrue – an astonishing $7.4 trillion.

Conservatives waited until after the election was over to breach the country's debt ceiling. Although the country actually reached $7.4 trillion in debt in early October, Treasury Secretary John Snow employed a host of accounting tricks to technically avoid breaching the limit. One trick even including suspending investments in the Civil Service Retirement and Disability Fund. Snow's moves were directly designed to prevent conservatives in the House from having to vote on such a politically sensitive matter in the weeks before the election.

President Bush and his allies have been fiscally irresponsible since they took office. In the year 2000, independent projections showed that the Untied States was on the path to a $5.6 trillion surplus. Now, due to irresponsible fiscal policy, tax cuts, and the cost of the war in Iraq, we face a $3 trillion deficit – a collapse of nearly $9 trillion. Including this latest increase in the debt ceiling, the right wing has now raised the debt limit by more than $2 trillion since Bush took office.

Massive tax breaks and enormous deficits have negative economic consequences. When the government has to borrow large sums of money as they do now, there is less money for average Americans to buy a house, car, or pay for college tuition. This smaller pool of money leads to higher interest rates, which slows economic growth by putting the squeeze on consumers and business investment.

Daily Talking Points is a product of the American Progress Action Fund.