“This Act establishes the most gigantic trust on earth. When the President signs this Act the invisible government by the Money Power, proven to exist by the Money Trust Investigation, will be legalized. The new law will create inflation whenever the trusts want inflation. From now on depressions will be scientifically created.”
- Congressman Charles A. Lindbergh, Sr., 1913, on the Federal Reserve Act
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Congress Grants Fifth Increase In Public-Debt Ceiling Under Bush
Fifth Increase Under Bush, To $9.815 Trillion, Reflects Rising Costs of War in Iraq
By DAVID ROGERS
WASHINGTON — The Senate gave final congressional approval to an $850 billion increase in the public debt, the fifth such adjustment under President Bush and one reflecting the rising costs of the war in Iraq.
[Max Baucus]
Adopted 53-42, the revised $9.815 trillion ceiling is intended to give the Treasury enough borrowing authority to manage through the end of Mr. Bush’s presidency and into 2009.
It represents an almost $4 trillion increase from the statutory debt limit when Mr. Bush took office in 2001, and Democrats used the occasion to decry the administration’s fiscal policies even as their leaders felt compelled to back passage.
“What we’re doing with our very high debt is essentially blowing out living standards,” said Senate Finance Committee Chairman Max Baucus (D., Mont.).
With a new fiscal year beginning Monday, senators also approved and sent the White House a stopgap spending bill to keep the government operating through Nov. 16. Agreement also was reached to expedite passage of a major defense-authorization bill Monday.
The debt-ceiling debate underscored the mounting budget tensions between the Democratic majority and Mr. Bush over domestic priorities. None of the annual spending bills for government agencies has been completed, and the backdrop last night was an impending veto fight over health insurance for the children of low-income families.
That measure, approved 67-29, would add $35 billion in spending over five years and cover costs by raising federal tobacco taxes equivalent to an added 61 cents per pack of cigarettes. Eighteen Republicans joined in support, and Democrats said their “pay-as-you-go” budget approach was required to slow the buildup in public debt.
When Mr. Bush took office in 2001, the debt limit stood at $5.95 trillion, a statutory ceiling that had remained since August 1997. By June 2002, a $450 billion increase was needed, and in 2003, 2004 and 2006, three increases added an average of about $855 billion each to finance government costs and wars overseas.
The administration argues that its tax cuts have proved vital to sustaining the economy, and the U.S. has lived through periods when the government’s debt was far higher as a percentage of gross domestic product. But in 2001, debt was 57% of GDP compared with about 65% today.
Overseas wars are clearly a factor, and just this week the Defense Department asked for about $190 billion to sustain military operations in Iraq and Afghanistan in 2008, a $25 billion, or 15%, increase over this year.
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Related
The Inflation Tax
All government spending represents a tax. The inflation tax, while largely ignored, hurts middle-class and low-income Americans the most. Simply put, printing money to pay for federal spending dilutes the value of the dollar, which causes higher prices for goods and services. Inflation may be an indirect tax, but it is very real- the individuals who suffer most from cost of living increases certainly pay a “tax.”
The Triumph of Structured Finance
Failing banks, toxic bonds and mortgage laundering
Consider this: In 2000, when Bush took office, gold was $273 per ounce, oil was $22 per barrel and the euro was worth $.87 per dollar. Currently, gold is over $700 per ounce, oil is over $80 per barrel, and the euro is nearly $1.40 per dollar. If Bernanke cuts rates, we’re likely to see oil at $125 per barrel by next spring.
American Economy: R.I.P.
The careers and financial prospects of many Americans were destroyed to achieve these lofty earnings for the few. Hubris prevents realization that Americans are losing their economic future along with their civil liberties and are on the verge of enserfment.
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