Quote:
Originally Posted by whell
Your first paragraph appears to describe a scenario where debt is never retired, and allowed to grow proportionately to revenue.
The way the Federal Gov't works, as a general rule, spending increases each year in the budgeting process thanks to the Fed's use of baseline budgeting. Just by virtue of the budgeting processes, a spending increase is "assumed" into the budgeting process each year.
Bottom line - the Fed leads with an assumption in spending increases each year. It then traditionally overspends the increased budgeted spending amount each year. That's a level of fiscal irresponsibility that is reserved only for those organizations that can print their own money.
This is why your second point that "there's plenty of room for additional taxation" is, to me, analogous to giving the alcoholic another shot of bourbon. It's not sustainable to fix a system where spending over the budget is rewarded by more money to spend. |
The bolded part is counter-factual. The spending of federal agencies is constrained by law, the budget is a law. The constitution says (look up the actual language if you want) that nothing goes out of the Treasury unless duly appropriated by congress. Overspending for emergencies must be 'paid for' with legally appropriated funds. A program that goes 'over-budget' cannot legally obligate the government to spend over-budget, until it gets more budget. You are mixing up Fed money supply activities with the funding of federal programs. The Fed does not 'print money' and hand it to federal agencies.
By the way, counter to your informal usage, when I say 'the Fed,' I mean the Federal Reserve Bank, not the federal government agencies collectively.