Debt Limit Raised

It was inevitable. The Senate voted to raise the national debt limit by an additional $781 billion, which at the current rate of deficit should keep us going for a short while. The new York Times reports the story here: Senate Votes to Raise U.S. Debt Limit to Nearly $9 Trillion We cannot afford the crisis that would ensue if the limit was not raised, so it has to be lifted. Unpleasant though that be!

To put this in perspective, the debt has risen by approximately $200 billion since October 2005, and by about $2.5 trillion since George Bush and his so-called conservatives took office. Even during the surplus years at the end of the Clinton administration the debt didn’t really fall, it merely rose very slowly. Here is the official Treasury Department figure: National Debt Figures .

And let’s all remember that the vast majority of this debt is held by American banks, other financial institutions, and individuals. It’s not all going abroad, although with the negative savings rate it is clear that Americans are not accumulating as much of this debt as before.

Still, the point is that huge and out-of-control annual deficits mean that the debt is piling up, which means that interest costs are also piling up. A rise in interest rates and even the false accounting of the Bush regime will be overwhelmed. This is a huge risk in our financial system. And it’s there because of George Bush’s tax cuts.