Saturday, December 7, 2013
Kennebec Journal Staff
Economists measure the national debt as a factor of the gross domestic product because a bigger economy generates more tax revenues and can support a bigger debt. Our current economy is generating record tax revenues mostly because the economy is huge, with GDP at about $16.6 trillion, according to the U.S. Bureau of Economic Analysis. Today's debt is $16.7 trillion, according to the U.S. Treasury and is 1.006 times greater than GDP. By comparison, the 1946 debt was 1.21 times larger than the 1946 economy largely because of World War II spending. Today's debt, based on GDP is actually 16.9 percent smaller than the post-war debt in 1946.
Congressional avoidance of the debt ceiling is not sustainable. The U.S. Treasury has enacted extraordinary measures by halting investments in federal employee retirement funds, for example, and using the cash to pay for services. When the debt ceiling is raised, the "borrowed" investments will need to be repaid. Treasury Secretary Jack Lew says that September is the date at which extraordinary measures will no longer work and the government will not have the cash to pay its bills.
The current debt level is not high enough to warrant the extreme measures and subsequent harm to our economy that A long-term debt-ceiling freeze would create. If Republican lawmakers force a needless crisis over the debt ceiling, then they do not deserve to be reelected in 2014.