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Legacy of Deficits and Debt as Far as the Eye Can See


This news story was published on March 7, 2013.
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Senator Charles Grassley

Senator Charles Grassley

From Senator Charles Grassley –

Every wage-earning American started the new year with less take-home pay. The payroll tax holiday ended on January 1, which meant breadwinners across the country were forced to figure out how to make ends meet with two percent less.

Now Washington is getting a taste of its own medicine: making do with less. Automatic spending cuts took effect on March 1, requiring Uncle Sam to cut back 2.4 percent of its spending to save $85 billion from a $3.5 trillion annual budget.

The agreement to lift the debt ceiling in August 2011 eventually led to the automatic across-the-board spending sequester currently in place. Because political leaders failed yet again to reach an agreement on deficit reduction, the federal sequester kicked in on March 1.

Contrary to the school of thought that we can tax our way out of this sea of red ink, reality tells a much different story. Washington is drowning in an ocean of debt because Washington spends too much money. The sooner political leaders come to grips with reality, the better.

Here are the facts. Under current law, tax revenue coming into the federal Treasury soon will reach and then surpass the 40-year average level. Revenues will remain at historically high levels through 2023, according to the nonpartisan Congressional Budget Office, or CBO. At the same time, federal spending already is above the 40-year average level. And it’s projected to increase.

So, according to CBO, if tax and spending laws remain on course, the federal debt held by the public will reach 76 percent of the gross domestic product by the end of this fiscal year. It will hover above 73 percent from 2014 to 2023. That level of federal debt is significantly higher than the 39 percent average of the past four decades.

This means we are living high on the hog today on our children and grandchildren’s dime. It means Washington is borrowing on the backs of the next generation. It means Washington needs a reality check before the American Dream fades into the backseat of historical fiction rather than serving as the driving force behind the American way of life.

Those who claim the national debt is harmless are talking hogwash. Consider that foreign investors own approximately 48 percent of the national debt held by the public. We owe both the Chinese and Japanese governments more than $1.1 trillion. Money that is tied up to service the debt is money that’s unavailable for tax relief or to finance services and functions of government.

Federal spending on Social Security, health insurance subsidies and debt service is projected to rise significantly as America’s aging population reaches retirement and health costs continue to soar.

Instead of taking a stand proclaiming the deficit buck stops at his desk, the President is waging a public relations blitz to convince Americans that Washington needs even more taxes to balance Uncle Sam’s fiscal ship. Regrettably, he’s using his bully pulpit to manufacture a crisis, that is, by suggesting meat inspectors, air traffic controllers, first responders, border patrol agents and teachers would lose their jobs as a result of the sequester. When average Americans are forced to make ends meet with less, essentials such as food and shelter are not first up on the chopping block.

Instead of standing up for America’s long-term prosperity, the President is telling Congress to stand down and raise taxes, again.

But, we already went down that road. The President argued in December an across-the-board tax increase was necessary to prevent the country from free-falling over a so-called fiscal cliff. His solution to Washington’s spending binge is to raise taxes. So, against a melodramatic backdrop played out on New Year’s Eve, the President secured a tax hike. In addition to the payroll tax increase, Americans will now pay up to 23.8 percent on investment income. And the top marginal 39.6 percent tax rate now effectively reaches 41 percent due to phase-outs of personal exemptions and limits on itemized deductions.

Even so, the President is calling for raising more taxes. He’s choosing to declare the sky is falling instead of working with Congress on meaningful spending and entitlement reforms, not just to save money but to save the programs themselves.

The President is wasting this opportunity to address Washington’s debt crisis. Chronic fiscal mismanagement creates a crisis in confidence. The uncertainty harms the economy and weakens the inalienable pursuit of happiness and prosperity. By abdicating the high road and failing to commit to address the swelling debt burden, the President’s vision of America saddles future generations with a legacy of deficits and debts as far as the eye can see.

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10 Responses to Legacy of Deficits and Debt as Far as the Eye Can See

  1. Avatar

    common sense man Reply Report comment

    March 7, 2013 at 6:03 pm

    Republicans and Democracts it doesnt matter. Grassley talks about the deficit, the insane Steve King talks about Obama care going to explode the debt, democrats in favor of raising our taxes again. I have a solution to put 15 million dollars a DAY back into our national bank. The US government spends 15 million dollars a day to try to rebuild Iraq. In the past ten years the government has spent…please sit down for this…60 Billion dollas in American taxpayer funds, and what has it done? Iraq is a unstable and broken land that hates Americans. Wait it gets better the 60 billion is in reconstruction money. It does not go to feed starving people or start schools. Stuart Bowen who is the inspector general for Iraq reconstruction said himself in a report today that the project has laid bare a trail of waste.
    Please keep sitting down if you think thats bad US taxpayers have spent 90 BILLION in Afghanistan in the past 12 years on reconstruction projects only. They hate us as well.
    So if you think the deficit and in fighting going on in Washington is bad here is a solution. STop spending that money and bring it back to the USA you complete idiots

  2. Avatar

    blog Reply Report comment

    March 7, 2013 at 5:47 pm

    And what does cannabis in colorado have to do with this topic on the deficit brick in the mall? Your making no sense.

  3. Avatar

    blog Reply Report comment

    March 7, 2013 at 3:01 pm

    Obama is doing an excellent job of looking bad on his own like closing the White House even though the people who give the tours are volunteers. To him and all you right wing democrats it’s about taking the house in 2014 so you can get more from those fat cat’s who have done well for themselves and give it to the deadbeat nation who votes for your party. Just loved the democrat woman senator on the tube yesterday bitching about the people who have done well in the rising stock market while her people were suffering. Try something different like get a job. Meanwhile think I’ll pull some profits off the table and take a nice fat cat vacation. Ah the fruits of hard work.

    • Avatar

      another brick in the mall Reply Report comment

      March 7, 2013 at 4:32 pm

      Colorado has legal cannabis that tastes like pineapples and it’s not far away. What happens in Colorado stays in Colorado blog.

  4. Avatar

    another brick in the mall Reply Report comment

    March 7, 2013 at 10:25 am

    Hey, it takes money to make money. If we wouldn’t have spent the farm, we’d have collapsed because we were to big to fail, remember? We had a crises, remember?

  5. Avatar

    sickastupd Reply Report comment

    March 7, 2013 at 10:23 am

    Spending as a percentage of GDP is running at the highest level since the 1940s, tax revenues are also low by historical standards. For fiscal 2009 and 2010, receipts were just 15.1 percent of GDP, and last year they inched up to 15.4 percent. They haven’t been that low since 1950. And prior to 2009, the average since the end of World War II was 17.8 percent.

    Again – look to the House for an answer to how this got so bad. And Chuck, you’re right in there with your foolish pals. It’s more important for you guys to make Obama look bad so you can “win” than it is to help US. Shame on ALL of you.

    • Avatar

      LVS Reply Report comment

      March 7, 2013 at 10:33 am

      @Sicka-After thinking on this for some time it seems to me that both sides need to rethink what they are doing. On the Republicans side they need to understand that as we gain more and more people and more responsibility (the world keeps getting bigger too) it cost more money. That means simply that we need more revenue. The Dems need to understand that while we need more revenue they can’t use it to fund their wish list social programs. It should go to paying out expenses required as a country like defense and border security. Now, they need to sit down and do their jobs like we elected them to do. That means they must quit acting like children and start talking to eachother. Then they must be honest and stick to their word.

  6. Avatar

    sickastupd Reply Report comment

    March 7, 2013 at 10:16 am

    But note also that receipts are running at levels that are well below historical averages. It is the combination of high spending and low revenues that is producing the current string of trillion-dollar annual deficits, and piling up debt. Those who blame deficits solely on spending ignore the other side of the ledger.

    And lest we forget, it has been the republicans who are notoriously REFUSING to address revenues.

  7. Avatar

    mrfoad Reply Report comment

    March 7, 2013 at 8:04 am

    Grassley is correct on most of his numbers, but he needs to be reminded that all of this has happened on his watch. The problem is that we have too many Republicans and Democrats in Washington and not enough Americans. Mr. Harkin has done us the favor of deciding to retire, not it is time for Mr. Grassley to do the same.

  8. Avatar

    blog Reply Report comment

    March 7, 2013 at 6:27 am

    I am not a Grassley fan but thought this was well stated with many facts to back it up. Both sides need to empty their dippers and address this potentially disastrous issue. Our children and grand children should not be held accountable for our mistakes.