The Treasury Departmentnow saysour national debt will exceed our entire gross domestic product by the end of this year. That hasn’t happened since World War II, when we had a few more justifiable expenditures and a far smaller economy. Meanwhile, the debt ceiling debate continues apace in Washington, with no indication on the part of President Obama or Senate Majority Leader Reid that much of anything is really in need of fixing.
Neither man has so much as advanced a budget that, (A) he will stand by, or (B) the Congressional Budget Office (CBO) scores as reducing deficits or spending by so much as $1 — even versus current law (which the CBO projects would lead to $6.7 trillion in new deficit spending over the next decade). The seriousness of the problem (recognized across most of the land), and the lack of seriousness of the response (in Washington), provides an interesting juxtaposition.
But perhaps the most bizarre aspect of the debt ceiling debate so far has been the Democrats’ rather puzzling insistence on tax hikes. Everyone knows that the Democrats want the debt ceiling to be raised. But now the Democrats are claiming that they will only go along with raising the debt ceiling if they also get something else they want: a tax hike. They want a twofer: more borrowing (and hence more spending) and higher taxes.
If Republicans give ground on tax hikes — even by closing tax loopholes and letting the government pocket that money (rather than closing loopholes in exchange for lowering tax rates) — they will deserve every bit of the predictable public outcry that awaits them. Or, the Republicans could call the Democrats’ bluff, testing how much the latter really want to be prevented from extendingtheir unprecedented borrowing and spending spree.