Treasury Dept brags about $80 billion increase in debt

This week, the Treasury Department happily announced that the deficit in the latter fourth of 2006 reached $80.4 billion.  So how is that positive?  It was the lowest deficit of any 4th quarter in four years -- certainly a step in the right direction.  Newspapers all over the country jumped on the story, as if it was a sign that our budgetary situation was beginning to turn the corner.

But is a $80.4 billion deficit for a quarter of the year anything to cheer about?  The last time it was any lower was in 2003, during an actual recession.  Translation: our deficit has risen during a time of economic prosperity, when inflation has gone up.  What all this means is a lot of the prosperity was artificial, and the debt could increase in the near future.  When debt increases, so do interest rates and so does our dependence on foreign banks in non-democracies such as China.

In fact, the non-partisan Congressional Budget Office (CBO) is predicting the debt to increase this year.  They forecast a 2007 deficit of $286 billion, larger than in 2006.  The House Democrats' new spending rule, titled "Pay as You Go," is a healthy step in the right direction to control spending.  But in order to minimize the deficit in the coming year, more money may have to be cut from entitlements.

The Democratic Congress will need to be careful what it spends taxpayer money on over the next two years.  Young Americans will eventually have to be the ones paying interest on this debt, and they keep that in mind when heading to the polls each election cycle.  As a young American, I speak from experience.

Comments

[clayton shedd]

could this blessing be because the gop never passed 9 of 11 spending bills? would be interested if anyone would know how to research this.