Raising The Debt Limit - What's It To Me?

Sometimes politicians make the stupidest mistakes and their actions reveal much more than their words.

So, Biden goes on TV to push for raising the US debt limit. To deliver this very, very urgent and important message, he asks some important people to help him drive the point home. Here’s who he invited:

 

The CEOs of:

 

1. Bank of America

2. Citibank

3. JP Morgan

4. NASDAQ

5. Deloitte

6. The National Association of Realtors

7. Raytheon (94% of its revenue comes from defense contracts)

8. Intel

 

and the head of

 

9. The American Association of Retired Persons

 

 

 

Thus:

• Five out of nine are financiers 100% dependent on debt
  
• One is the head of a defense contractor whose revenue depends entirely on funding (debt) decisions made by politicians.
• One heads an industry that depends on ever more debt to finance ever more expensive homes.
• One - just one - heads a true American tech champion
• And, finally, one represents people who will really suffer from a government shutdown, if their Social Security payments are delayed

So, how is the typical middle class Mr. and Mrs. John Q. Public taxpayer, in whose name the already huge public debt will be raised even further, supposed to identify with those people and their institutions?  Why should they care? To fund the banks, the realtors and the defense industry?

Oh, and Biden is a Democrat, a member of the party that champions the working class - supposedly. Sometimes the truth is there in plain sight, on prime time TV...

But since this is a data driven blog, let’s look at numbers.

The 2022 US budget projects revenue of $6.01 trillion and deficit of $1.84 trillion,  ie this is what needs to be covered by more debt, ie an equal rise to the debt limit. If we decided NOT to raise debt, we must cut outlays and raise revenue by a combined $1.84 trillion. 

Here are some expenses we should not cut, in billion dollars

• Interest on existing debt (must not default): 305
• Social security, income security, Medicare: 2960
• ===> Total untouchable: 3265

This leaves 6010 - 3265 = 2745 in all other expenses, (the largest is defense at 770 billion).

Given that we need to come up with 1840 to balance the budget, it is obvious that we can’t do it just by cutting these other expenses alone. So, here’s a novel (not) idea:

Cut defense by 50%: 385 billion - we are not at war and shouldn’t be the planet’s policeman, either

Cut everything else 25%: 690 billion

Total savings 1075. Still need another 765 billion ====> increase income and wealth taxes by that.  

Done.

Or, here’s another “radical” idea: the US burns through 500 million gallons of gasoline and aviation fuel per day! Tax it like the rest of the civilized world at $2.00 per gallon and you raise $365 billion per year. And gasoline would still be half the price than in Europe!!   

Sure, consumption will go down, but that’s what we need, no?