Federal debt fiasco

OPINION:

In its preliminary estimate, the Congressional Budget Office recently reported that the unified budget deficit for fiscal 2007, which ended Sept. 30, totaled $161 billion. That represented an $87 billion reduction from the 2006 deficit of $248 billion. Republicans in the White House and Congress pretended not to notice the inconvenient fact that the national debt increased by about $550 billion during the same 12-month period. How can this be?

Well, if you loot enough trust funds (e.g., Social Security, Medicare, Defense Department retirement and health, federal employee retirement, highway, unemployment, etc.) of their surplus cash throughout the year and spend the dough on other stuff and if you deduct the interest expenses — which had to be paid for previous looting — from the government’s total interest costs (to arrive at “net interest,” which becomes part of the “unified” budget), then a $161 billion “unified” deficit can easily evolve into a $550 billion jump in the national debt. The national debt, officially known as the “gross federal debt,” increased from $8.45 trillion at the end of fiscal 2006 to nearly $9 trillion at the end of fiscal 2007.

Meanwhile, the Senate finally got around to authorizing an $850 billion increase in the statutory debt limit. The measure, which represented the fifth increase in the debt ceiling since 2002, cleared the Senate in a 53-42 vote on Sept. 27 after Treasury Secretary Henry Paulson warned that the existing debt ceiling would be pierced around Oct. 1, which, coincidentally, represented the first day of fiscal 2008. Pretending that some other political party was in charge of fiscal policy and federal debt management since the beginning of 2003, when the GOP regained simultaneous control over both chambers of Congress and the White House and held it for the next four years, 20 Republican senators voted against raising the debt ceiling.

During the 2003-2007 fiscal period, cumulative unified budget deficits exceeded $1.5 trillion (more than $300 billion per year), which compares to cumulative unified budget surpluses in excess of $400 billion over the previous five-year (1998-2002) period. During the 2003-2007 fiscal period, moreover, the national debt increased $2.8 trillion, averaging $560 billion per year.

In early March, for the first time, the amount of federal debt held by the public officially crossed the $5 trillion threshold. And on Oct. 1, for the first time, the amount of federal debt contained in all the “trust” funds exceeded $4 trillion. And now that the debt ceiling has been increased, the federal government quickly jumped over the $9 trillion national-debt hurdle. Pass the champagne.