During the next several weeks, President Barack Obama and the congressional leadership will pretend to fight about the nation’s “debt ceiling.”
Rob Douglas' column appears Fridays in the Steamboat Today. He can be reached at rdouglas@SteamboatToday.com.
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It will be a pretend fight because a majority of the two dominant political parties in Washington, D.C., always unify to treat the debt ceiling as an unlimited limit.
It will be a pretend fight because a majority of the two self-entrenched parties are addicted to the power that comes with redistributing more than $3.5 trillion each year.
It will be a pretend fight because those bipartisan power addicts derive their power from a body politic comprised of deficit spending junkies willing to sell their children’s future for today’s Federal Reserve fix.
So if we’re a nation of spending addicts getting our fix from pols who push a seemingly endless supply of artificial dollars from the Fed, why should we pretend there is a debt ceiling?
Because every now and then it’s good to sit down and have an honest conversation about our public spending addiction with the hope of preventing America from ending up like Elvis Presley, John Belushi, Heath Ledger and Cory Montieth.
For Steamboat Springs, the timing of this year’s debt ceiling debacle under the U.S. Capitol dome should serve as a catalyst for a frank discussion in Centennial Hall about how to operate the city without any federal funds.
With the Steamboat Springs City Council’s annual budget retreat taking place Tuesday, the City Council should take the opportunity to determine how much of the city’s budget relies on dollars that flow directly and indirectly from federal coffers, as opposed to local taxes and fees, and then institute steps to gradually eliminate the use of those dollars.
But wait, aren’t the dollars flowing from Washington dollars that originated in the pockets of Steamboat residents?
Yes, some. But soon, almost none.
To illustrate how few tax dollars will be available for federal spending in the very near future — including grants and subsidies that flow directly and indirectly to localities like Steamboat — consider the information in the following four paragraphs from Peter J. Tanous in “The Fed’s ‘Hidden Agenda’ Behind Money Printing” at CNBC.com.
“The (Congressional Budget Office) estimates that by 2020 total debt held by the public will be $16.6 trillion as a result of the rising accumulated debt.
“Do the math: If we were to pay an average interest rate on our debt of 5.7 percent (the average over the last 20 years), rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion.
“Now compare that to the amount the Internal Revenue Service collects from us in personal income taxes.
“In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried.”
Granted, a lot could happen during the course of the next seven years to improve the fiscal picture Tanous paints. However, Tanous only addressed a small portion of the economic burden that is mounting with each tick of the clock. For example, Tanous ignored the more than $100 trillion in unfunded federal liabilities — including Social Security and Medicare — along with underfunded state and local government pensions.
Given the potential fiscal calamity that awaits America because of its addiction to federal deficit spending, the question for the council on Tuesday is the question that should be asked of every local elected body — including the Routt County Board of Commissioners — across the country: Will you begin the process of becoming financially self-sufficient?
After all, Steamboat Springs is one of the wealthiest communities in the country. If Steamboat can’t balance spending with local revenue in the next several years so that the city will not require any funds from the federal government, there is no hope of ever controlling spending in our nation’s capital.
To reach Rob Douglas, email rdouglas@SteamboatToday.com.