Recently Treasury Secretary Snow warned that the US is dangerously approaching the debt ceiling set by Congress ($8.2 trillion). Beyond this ceiling the US government is forbidden from borrowing. This poses a dilemma for a government that has become obsessed with deficit spending. It is simply inconceivable that this government has incurred such a debt, with little to show for it.

Sadly, the Congress is set to raise that limit to $9 trillion, while taking now steps to reign in excessive government spending. On the contrary, leading politicians in both parties have proposed increases in government spending on a host of new initiatives. Many of these spending measures will succeed only in ballooning the debt even further, with no measurable benefits to speak of. In the past generation government spending has grown by leaps and bounds. Comparatively, the US public debt as a proportion of overall GDP is in the moderate range among nations of the world, nonetheless, at the rate of increase, the US will soon eclipse its ability to repay the debt. Indeed, at this very moment servicing the debt (i.e., paying the interest on the amount owed) accounts for a sizeable portion of the government’s budget. Today interest on the debt accounts for 10% of the overall budget.

According to the US Treasury, nearly half of the federal debt is held by foreigners, such a scenario poses serious challenges for the US. There is always a risk that foreign governments make cease buying government securities, particularly if there is a growing sense of financial insecurity. At no time in our history, except for a brief period during the presidency of Andrew Jackson, has there been no federal debt. Since 1980, however, the rate of increase has become quite staggering. In 1980, the US debt was just under $1 trillion, in ten years that number had trippled. Today as we approach the $9 trillion mark, the US will soon be forced to confront serious challenges. The greying of America will ensure a contracting workforce, coupled with a growing number of Americans seeking assitance at the public trough through social security and medicare. At present US debt measures approximately 63% of GDP, but this figure is expected grow over the next decade. It should come as no solice that such figures are comparable with nations like France and Germany, given their history of high unemployment and slow economic growth.

The US must begin to take steps to curtail deficit spending, particularly in areas of entitlements, which account for a sizebale portion of the overall federal budget (Medicare: 14%, Medicaid: 7%, Social Security: 21%). Congress could begin that process today. Instead of simply raising the budget ceiling, Congress could (and should, but won’t) impliment a measure of budgetary restraint. Given the political climate, such efforts aren’t likely to be entertained. The GOP has proven they are just as easily swayed by pork politics as the Democrats. Even modest attempts to slow the growth of various expenditures are decried as “cuts.” Thereby ensuring that no significant action will be taken in the near term.
http://www.breitbart.com/news/2006/03/15/D8GCCFO01.html