The Real Cost of the Debt-Ceiling Deal - The American Spectator | USA News and Politics
The Real Cost of the Debt-Ceiling Deal
by

President Joe Biden and House Speaker Kevin McCarthy spent weeks of negotiating to authorize $4 trillion in new deficit spending over the next two years. This means that our national debt will be $35 trillion in 2025. The interest cost will be up to $1.4 trillion annually, only a small amount less than the current cost of national defense and Social Security combined. This staggering debt undermines the future prosperity of every American.

Federal spending contributes to a sense of entitlement, including for every person receiving federal largesse. Think of the adverse impact of federal student loans. President Barack Obama promised that government-granted student college loans would be more efficient, but these loans have, in fact, ballooned the cost of college. Concurrently, colleges have reduced quality outcomes and propagandized students, undermining our society because many students are hopelessly in debt. Now, progressives in Congress want to terminate the provision requiring repayment of student loans. For many of our young workforce, the burden of high student loans precludes marriage and buying a house.

The purported work requirements now have expanded exemptions, which probably means fewer recipients are working and explains why the workforce participation rate is declining — it is now 62.6 percent, compared to China’s 67 percent. America has 10 million unfilled jobs because the government pays too many individuals not to work or because they lack the skills required.

Many will cheer the end to the debt crisis, but our federal government now consumes 23.7 percent of gross domestic product. This excessive spending is creating high inflation and interest rates, crowding out small business lending, and, most importantly, undermining private investment.

The propensity to spend by both political parties is overwhelming and continues to worsen. Since 2019, the federal budget has increased by 40 percent, but our GDP has only grown by about 10 percent. This agreement fails to rescind billions of unspent COVID funds that are no longer needed.

China, meanwhile, continues to invest in factories and technologies and is producing airplanes, weapons, and semiconductors. America remains heavily dependent on many sole-sourced products from China, which is hostile to our values and future.

In the United States, producers must gain permission from federal regulators to produce most products, including home dishwashers. Regulators are off work at 3:30 p.m., and many are already home because only about one-third of federal workers are at the office on any given day. Producers show up at the factory or office early and work hard.

Commercial dishwashers take one to three minutes each cycle while the federally regulated home dishwasher takes up to 90 minutes or more, for the purpose of saving energy. Every American knows that these regulations are counterproductive.

Working middle-class Americans are punished by high taxes to provide federal largesse to those who don’t work. For example, those making $89,100 are subject to a 24 percent marginal federal income tax rate, on top of state income tax and a FICA of 7.65 percent.

Last year, Congress passed the CHIPS and Science Act, allocating $52.7 billion to fund semiconductor factories. Added to this bill was another $227 billion for other dubious programs. This is a prime example of how Congress uses a hot-button issue to dramatically increase spending on aspirational projects. The restrictions and requirements on semiconductor manufacturers in the CHIPS Act will dramatically increase the cost of American-made chips (estimated at 50 percent higher) vs. Taiwan- and South Korean-made chips. America only produces about 12 percent of the semiconductors used in the United States. (READ MORE from Bob Luddy: China’s Threats to Taiwan Are Threats to American Prosperity)

Ludwig von Mises warned us many years ago that most-to-all government interventions fail, leading to more interventions. The COVID shutdown and endless spending that followed is a prime example of this theory.

The U.S. House has some courageous leaders, including Reps. Dan Bishop (R-N.C.) and Chip Roy (R-Texas). Seventy-one Republican congressmen voted no on this bill, which passed with 165 Democrat votes. 

This debt-increase act misallocates scarce resources, allows government — not the economy — to grow, and creates a higher risk of a financial crisis.

The real cost of this debt-ceiling deal is slow economic growth and a lower standard of living for middle-class Americans, plagued by high taxes, regulation, and inflation.

Sign up to receive our latest updates! Register


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Be a Free Market Loving Patriot. Subscribe Today!