The otherworldly nature of the current discussions and proposals in Washington over addressing the “fiscal cliff” can be seen in a brief look at where the country stands financially.
Through the first two months of the 2013 fiscal year, which will end on September 30, 2013, the federal government has already run up a $292 billion deficit. Our overlords of Washington are clearly on track to run up a fifth consecutive full-year shortfall of over $1 trillion. Before fiscal 2008, the highest annual deficit ever recorded was $455 billion.
Federal outlays during October and November of $638 billion were 16 percent higher than during the same two months in 2011 and a breathtaking 52 percent greater than October and November of 2007. Collections in this lukewarm recovery, if you can even call it that, were up by less than 10 percent.
As of Monday, December 17, the national debt was $16.35 trillion, up by over $5.7 trillion in the 35 months since Barack Obama took office. The portion of the national debt known as “debt held by the public,” which is really debt held by any entity which is not part of the U.S. government but includes foreign countries and other foreign holders, made up $5.25 trillion of that amount.
A significant portion of that $5.25 billion is held by Ben Bernanke’s Federal Reserve, which many don’t realize really isn’t a part of the government. Instead, the Fed is a collection of 12 district banks, each of which is “a legally separate corporation that is owned by the commercial banks in its district.” Because they produce no goods or services, the district banks, and the Fed itself, have no inherent ability to repay the Treasury and other securities they have bought from our beyond-profligate government.
Within this dangerous framework, House Speaker John Boehner and President Obama are obsessing over whether taxes should be raised on those with annual incomes of over $1,000,000 — or $400,000 or $250,000, or whatever. Besides the obvious danger that any tax increase on our most productive citizens will slow down an already sluggish, low-growth, under-employing economy, the amounts raised will be a pittance, garnering less than 10 percent of the amount needed to close projected fiscal gaps (I would say “budget gaps,” but the government hasn’t passed a budget in nearly four years).
Where are the spending cuts? Or, more properly framed, where are the reductions in projected future spending? A Wednesday morning Associated Press dispatch on the President’s plans to veto Boehner’s so-called “Plan B” framework reported that the President would veto such a plan if it ever reached his desk — something that in the real world probably wouldn’t happen because Senate Majority Leader Harry Reid wouldn’t let any House bill Obama opposes get that far — because “the deficit reduction that would result from the `Plan B’ approach is minimal and offers no spending cuts.”
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