The next act of the play, entitled “Revision of the US Public Debt Ceiling”, which has been played in Washington for several decades, has ended. For almost three weeks, the central theme of the world media was a budget crisis and a possible default by the United States. In one bundle, two problems were considered: the lack of a state budget from the state with October 1 and the exhaustion of the limit of government borrowing.Only late in the evening on October 12, local time, the House of Representatives of the United States approved a compromise budget project, which allows raising the country's debt ceiling and thus avoiding a technical default and resuming the work of government agencies. 16 congressmen voted for the bill, 285 voted against. Earlier, on October 144, this document was approved by the US Senate.
The main idea of the play: America can and should increase its government borrowing. This idea has already mastered the masses. People were told that there is no other way out of the budget crisis. Like, if the ceiling is raised, the US government will be able to place a new batch of treasury securities inside the country and abroad, receive the necessary money and form the federal budget at the expense of these investments.The question of whether it is necessary or not necessary to raise the national debt ceiling is not even discussed ... All disputes and discussions revolve around private issues. What could (should) be a new debt ceiling? What will Republicans be able to bargain in exchange for their consent to raise the ceiling? Should not the ceiling be lifted and the national debt be increased without thinking?
The need to raise the US government debt ceiling is recognized by both major political parties in America; Wall Street and the City of London have called out for its immediate review. These appeals were joined by countries such as China and Japan, which together hold US Treasury securities worth about 2,4 trillion. dollars and fear that these papers will depreciate. In addition, the Fitch rating agency also called, which warned of a possible downgrade of America. The International Monetary Fund pushed for a revision of the borrowing limit, where it is rightly believed that the so-called “technical default” on the obligations of the US government would provoke a global financial crisis.
Few opponents who criticize the policy of increasing government borrowing point out that public debt has been growing exponentially in recent decades. If we extrapolate past trends in changes in public debt in the medium and long term, the American economy should collapse. State debt is the result of an unbalanced federal budget. The value of the public debt of the United States at any given time is the cumulative total of deficits and budget surpluses of all previous years. For stories America’s federal budget has often been deficient. However, then came the times of surplus budgets, due to which it was possible to repay part of the public debt. For example, from the end of the 1930's to the middle of the 1940's. America had large federal budget deficits, which was due to a multiple increase in military spending. National debt steadily increased. If in 1930 it was 16,6% of GDP, in 1940 it was already equal to 52,4% of GDP, and in 1946 it reached a record (and so far unsurpassed) bar in 121,2% of GDP. The reduction of budgets with a surplus after the end of World War II allowed America to begin a smooth decrease in the relative level of public debt: in 1950, it was equal to 94,0%, in 1960g. - 56,0%, and in 1970 - 37,6%.
America has entered a phase of chronic budget deficits since the end of the 1960s. They were provoked by the US war in Vietnam and the rapid increase in military spending. With the arrival of President Reagan in the White House, Washington proclaimed a new economic policy, which later became known as "Reaganomics." An important element of this policy was just the growth of public debt. If in 1980, the US national debt was equal to 909 billion dollars, in 1990, it already amounted to 3206 billion dollars, i.e. increased by 3,5 times. In relative terms, public debt in this period increased from 33,4% to 55,9% of GDP. Some bona fide American economists have noticed that at this time economic growth in America had completely stopped. The figures for US GDP growth shown by official statistics are a total bluff. These figures do not show an increase in the production of goods and services, but an increase in their consumption. These are goods and services that America acquires through borrowing from other countries.
Over the past 45 years, America has only four times had a budget in excess of tax revenues over expenditures. These were the years of B. Clinton’s presidency: 1998, 1999, 2000, 2001. During these years, there was a respite in the buildup of public debt and even a slight decrease in its relative (not absolute) level. So, in 2000, it was equal to 58,0%, and in 2001, it was 57,4%.
The past decade is a period of pronounced growth in public debt. In 2001, in absolute terms, debt amounted to 5,77 trillion. dollars, and in 2011 g. - 15,14 trillion. dollars, an increase in 2,6 times. In relative terms, debt increased from 57,4% to 100,0% of GDP. The American economy under the presidents of J. Bush Jr. and B. Obama finally hooked on the needle of borrowing, lost development incentives. In the summer of 2011, some sober-minded Republicans were then able to insist that raising the ceiling to 2,5 trillion. dollars must be accompanied by the obligation of the administration and the democrats supporting the president to reduce the total federal budget expenditures by the same amount for the duration of the debt limit. The administration of this promise did not fulfill, which aggravated the confrontation on Capitol Hill in October of this year.
Some believe that not only reduce, but even freeze the level of US government debt is no longer possible. However, it is not. Over the past five years, the annual federal budget deficit has steadily exceeded 1 trillion. This is, roughly speaking, approximately 1 / 3 federal budget expenditures. So, if the federal government does not resort to borrowing, then to ensure a balanced budget it is necessary to reduce costs by about 1 / 3. The calculations of experts show that such a reduction is quite possible. And for this you do not even need to reach the "technical default".
Unfortunately, alternative ways for America to get out of the fiscal crisis were not discussed either on Capitol Hill or in the American media. Experts know these options: a) increase the tax base of the budget; b) budget cuts; c) coverage of the budget deficit with the help of money issue organized by the treasury (issue of treasury notes).
Most US congressmen have a very short memory. They do not even remember some of the laws that were recently passed in the United States. First of all, this is the Law on a balanced budget and emergency deficit control adopted in 1985. It is also called the Gramm-Rudman-Hollings Law (Gramm-Rudman-Hollings Act). The law restricted the adoption of acts that increase spending and reduce income, inclusive of up to 1998. Subsequently, the law was supplemented by a general budget approval law of 1993. No one has repealed this law, but for some reason they don’t recall it today.
With political will, the president and the US Congress could not only freeze the level of US government debt, but even begin to reduce it. There are enough precedents in American history. One of them is a reduction in the absolute size of the public debt after the end of the Second World War. An even more impressive example relates to the 30 years of the 19th century, when President Andrew Jackson, an ardent opponent of the creation of a central bank in the United States, entered the history of his country not only by managing to close the central bank that existed at that time, but also by thanks to decisive measures to bring the US national debt to zero. Today in America they do not often remember their legendary Andrew Jackson. In fact, the national hero of America was in the information blockade. But the story of the struggle of Andrew Jackson against the bankers could open the eyes of Americans to the events of October 2013, on Capitol Hill. It would be clear why some options for overcoming the financial and banking crisis were discussed and others were silenced in every possible way. The answer is simple: because The decision, just taken by the US Congress, is dictated by the owners of the Federal Reserve System. Public debt is an effective tool by which financial oligarchs keep under their control both the president, the government, and the “people's elected representatives”.