Third in a Series
President Reagan is committed firmly to halting deficit spending and balancing the federal budget, he hopes by 1983.Ironically though, he had to ask Congress to raise the borrowing limit to $985 billion to cover spending commitments by the previous Carter Administration through Sept. 30, the end of fiscal ’81.
Most of the 31 debt limit increases of the past two decades had been voted perfunctorily, with conservative lawmakers, mostly from the Republican minority, registering protest votes.
Not so this year with a GOP majority in the Senate. Democrats, who had controlled both houses of Congress for a quarter century, forced a lengthy debate before yielding to the Republicans. The vote was 73-18 in the Senate: 304-104 in the House.
They accomplished the spending authorization – raising the debt limit by $50 billion so the government could pay its bills. But debate also provided insights on deficit financing under which the budget has been balanced only twice in the past 24 years – 1960 and 1969.
Sen. William Roth. R-Del. summarized: “The plain fact is that we now mast pay the bill for the extravagance of the past.”
Registering his continuing opposition to raising the debt celling, Sen. William Proxmire, D-Wis. declared massive borrowing results in “higher interest, more inflation, and bigger spending and deficits.”
“Just in the last four years,” said Sen. Orrin G. Hatch. R-Utah. “the federal budget has jumped from a little over $400 billion to $739 billion ( Carter budget for fiscal 1983); the national debt from a little over $650 billion to almost a trillion dollars; and interest on the debt from $42 to $100 billion in just four or five years …”
(The national debt is projected to reach $1 trillion in November or December, about $4,415 per capita.)
Sen. Strom Thurmond, R-S.C., said a balanced budget “is a goal we absolutely must move toward … with unwavering discipline. The future economic survival of our nation depends on it.”
Thurmond told of Reagan’s desire to end red ink spending and quoted the President as saying: “I intend to be the first president in history to come to Congress and ask a reduction in the debt ceiling.”
The veteran senator said inflation is caused “by monetization of the debts – excessive creation of money through the Federal Reserve System purchase and handling of federal debt instruments.”
Sen. William Armstrong, R-Colo., sold the $50 billion debt limit increase amounts to “half of everything Americans will save this year.” To dramatize the interest burden on the debt, Armstrong said it would require all taxes paid this year by 26 states (which he named) to meet the Interest obligation.
Democratic Sen. Robert C. Byrd of West Virginia, in a subsequent statement, explained that the public debt has declined in terms of the country’s gross national product.
“In 1960, with the national debt at 56.9 percent at the GNP, the entire productive capacity of our economy would have had to work more than six months to retire the debt,” Byrd said. “In 1980 the debt stood at about 35 percent of the GNP and theoretically it could be retired in just over four months.
Sen. David L. Boren, D-Okla. expressed concern at the heavy outlay for interest on the debt and said it interest rates go higher the burden could reach levels beyond the governments reasonable ability to pay.
He quoted economist Richard Russell as saying: “If the U.S. government were a corporation it would be bankrupt.”
In the House, Rep. William Dannemeyer, R-Calif., observed that some trivialize long-standing conservative concern with the debt, suggesting, “We only owe it to ourselves.” This type of thinking ignores “the rising cost of servicing the debt and the profound economic consequences of federal borrowing,” he said.
(Interest on the debt is projected at $94.1 billion for the present fiscal year and at $106.5 billion for fiscal ’82. Figures from Carter Administration estimates of Last January.)
Rep. Clarence Brown. R-Ohio applauded “rediscovery” of supply side economics and said: “To fight inflation, unemployment and rising debt we need a program that casts aside old-school Keynesian economics and puts in its place incentives to work, save, invest, and produce …”
Rep. Elliott Levitas, D-Ga. opposed debt ceiling increases and commented: “We are indeed charging fur coats to our grandchildren.” Levitas added: “The time has come to say enough is enough.”
Next: Exploring solutions.