The Debt Ceiling and Political Cowards

Fox News recently reported that "The House of Representatives ... voted to raise the debt limit by $1.9 trillion. That vote raises the debt ceiling to $14.3 trillion, a new high for the amount of debt the U.S. has ever carried." It goes on to say that "As recently as 2001, the U.S. debt was only at $5.7 trillion. But exploded throughout the past decade after Sept. 11, 2001, amid record spending by the Bush and Obama administrations." Furthermore, it noted that "If Congress doesn't hike the debt ceiling, the U.S. would be unable make good on Social Security and Medicare payments.

"It certainly makes sense to be opposed to raising the debt ceiling. The vast majority of it was in areas that the government has no business being in. Yet, I'm disgusted to see where some of the "nay" votes came from. The Senate approved the debt limit increase in mid-January on a 60-40 party-line vote. Meanwhile, the House vote was much closer, 217-212. All Republicans and more than 30 Democrats voted against raising the debt ceiling. I have heard our Congress be described as a "parliament of whores." At the very least it is a club of spoiled brats that believes it should be allowed to have its cake and eat it too. The two "stimulus" packages that added over $1 trillion to the national debt in one year alone could not have passed without the help of some (if not many) of those who voted against raising the debt ceiling. Grow up members of Congress. Be responsible on the front end so you do not have to pretend to be a victim on the back end.

The Fox article also stated that "moderate and fiscally-conscious Democrats were suspect of voting to hike the debt" and since the whole House is facing hostile voters in 2010, they all collectively voted to cover themselves.

On the one hand, it would have been a wonderful thing to witness the Congress voting against the debt ceiling. Such an act would force everyone to roll up their sleeves and get to work on a sustainable -- and maybe even Constitutional -- budget. But it is ridiculous to witness these politicians vote as though they are drunk with power when bills come before them and cannot own the results of their voting when the time calls for it. If a member fueled the debt, they should confess up to it. I believe you should ask your member of Congress -- if he or she voted for TARP and similar packages, but against raising the ceiling -- to explain how such was going to be paid for? Those are the type of tough questions that demand honest answers today.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Market Drops Below 7,000

I was a doomsayer in the eyes of many when I said the market would go below 8,000. Today, I'm seeing it skid well below 7,000 and it shows no sign of going back up. This is the lowest level in over a decade. Sure, there is plenty of time in the day, but it doesn't look good.

So what is driving the massive market decline? As usual, the news headlines are driving stock prices. The big headline today is Barack Obama's breath taking new budget proposal. Kevin Hasset points out in Bloomberg.com that "The gap between rhetoric and hype in President Barack Obama’s budget is as wide as the Pacific Ocean. Obama has not offered change; he has offered a continuation of George W. Bush’s policies. Obama is not the anti-Bush. He is Bush on steroids." I couldn't agree more and will go a step further...Obama's policies are the next logical step in the actions taken by Bush towards institutional socialism. People need to get past party and ideological lines and squarely place criticism where it belongs -- both among Republicans and Democrats.

How "big" is Obama's spending? Hasset notes the comparison between Bush's numbers and Obama's: "In January 2008, the Congressional Budget Office put out a 10-year forecast that included a projection for government spending. The forecast, at the end of the Bush spending spree, saw government spending in 2009 at about $3 trillion, increasing to $4.3 trillion by 2018."
These numbers seem outrageously high, but didn't even hit the reality. "federal spending for 2009 turned out $900 billion higher than was expected, because of the near-term policies associated with the financial crisis and the recession. Lost amid the hype about Obama cutting the deficit in half, however, is the fact that most of this higher spending sticks. Obama plans to spend $4.9 trillion in 2018, about $550 billion higher than the CBO’s projection. That’s right, $550 billion more."

Finally, Hasset notes that "looking at the entire 10 years, and extrapolating out the CBO number to include an estimate for 2019, Obama has proposed that government spending over the next 10 years be $5.3 trillion higher than the CBO projected just last year." Let's put this in perspective, in 2008 (before the massive spending increases in September) the entire budget of the federal government was only (I know, don't laugh) $2.7 trillion. This is a level that took over two centuries to reach. Obama intends to double that number in the next ten years. This budget shouldn't just make Wall Street nervous, but every single American should worry about their financial lives.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.