By Robert Willmann
There’s no business like show business. The United States Congress passed a law signed on 21 December 2024 to “appropriate money” to keep the federal government operating without being shut down until 14 March 2025. Misleadingly called “The American Relief Act”, it became Public Law 118-158, and is a story in itself and a labyrinth of tortured legislative writing. However, you can “appropriate money” all day long but will not get anywhere unless some money exists. The elephant in the room is the fact that the federal government is short of money.
This means the professional wrestling show that is Congress and the executive branch will go on. We could see this coming a year and a half ago—
Congress did indeed “suspend” the federal government debt limit by law on 3 June 2023, which means it is gone until 2 January 2025. Let’s have a party!
The 2024 federal fiscal year ran from 1 October 2023 to 30 September 2024. At its end, the federal government staggered around with over a trillion dollars owed in three categories: the total debt, the deficit for 2024, and interest paid on the debt—
Squirming in her chair, the awful Secretary of the Treasury, Janet Yellen, decided to try to distance herself from this bomb, and on 27 December 2024 sent a letter to several members of Congress, all of whom are given the appellation “Honorable”. She begins with, “I write to apprise you of certain upcoming events and actions related to the statutory debt limit”, and ends her little letter by pointing the finger—
By juggling the books internally, Yellen says that the federal debt should not bang up against the new limit until between 14 and 23 January. If the new debt limit established on 2 January is not raised by Congress, the Treasury Department will try to take “extraordinary measures” to prevent the government from defaulting on all sorts of payments.
This exposes the ugly truth that unless the federal government borrows increasing amounts of money which increases the total debt, it will be bankrupt. As long as the income and receipts are less than the expenditures and outlays, the debt problem worsens. Everybody knows that. But the political process does not address it.
When Joe Biden was sworn in as president on 20 January 2021, the total public debt outstanding was $27,751,896,000,000 [1]. Janet Yellen was sworn in as Secretary of the Treasury on 26 January 2021. On 5 June 2023, two days after the debt limit was suspended (3 June was a Saturday), the total debt was $31,825,679,000,000 [2]. On Friday, 27 December 2024, the date of Yellen’s letter to Congress, the total federal debt was $36,144,183,000,000 [3]. From the time Biden became president until 27 December, the debt increased by $8,392,287,000,000. From the time the debt limit was suspended in June 2023 until 27 December 2024, the debt increased by $4,318,504,000,000.
The 119th Congress as required in the Constitution will convene and start on 3 January 2025, since a different day has not been designated by a law passed to change the date for a specific year.
Today is New Year’s Eve. From 3 to 20 January 2025 is 18 days. What will Congress and the outgoing Biden do with the new debt limit that will already be maxxed out? Nothing? In that case, the Treasury Department will just try “extraordinary measures” to keep some payments going, and dump the hot potato onto the Trump administration. Or will Congress, before 20 January, agree behind closed doors on a small new debt ceiling increase until a date such as 14 March 2025?
[1] Daily Treasury Statement, January 20, 2021.
[2] Daily Treasury Statement, June 5, 2023.
[3] Daily Treasury Statement, Friday, December 27, 2024.
If the goal was to extract minerals from Ukraine and spread freedom as Linsey Graham claims, it could have easily been achieved. Instead we spent the money putting minerals back into Ukrainian soil, dissolved all their political parties, cancelled voting, free speech and freedom of religion. The breaking windows economy of the MIC would like to wish everyone a happy new year and thanks again for playing.
“thanks again for” paying. The MIC is the main cause of our extreme debt.
The MIC is one source (or cause) of the extreme debt. The adventures in Iraq and Afghanistan really put us over the top in MIC related spending. The other main drivers of debt are Social Security and Medicare. That said, there are lots of smaller entitlements and programs that, in aggregate, contribute to the hemorrhaging of funds.
Is BITCOIN the New Goal for the Gold Standard…Who Wins that Play,,?
It all seems a bit naff, doesn’t it?
If the “debt ceiling” is simply raised every time that the US Government debt hits it then the entire thing is simply virtue signaling to the rubes, it is not in any way, shape or form and attempt to impose discipline on government spending.
Repeal the legislation and let the debt go to whatever level the US government wills it to go.
I’m sure that will end well, because I’m sure that our government betters have our best interests at heart.
Yeah, Right,
Odd as it seems, I follow your logic on this one. Raising the debt ceiling, then raising the debt and acting like the raised debt ceiling makes any real difference is kabuki theater. Those congress critters who habitually vote not to raise the debt ceiling are trying to end the charade. I think they’re on to something.
TTG,
That is only true if the ones who refuse to vote to raise the debt ceiling either vote to reduce spending, or raise taxes (in particular on the wealthy) as well. In my experience, that is not in general something these people are prepared to do.
The “wealthy” don’t have enough money to cover the debt, even if you took everything they have (do the math). Everyone else is scraping by and if you take more of their money, they will either curtail spending, which hurts the economy, which hurts tax revenues, or they will go under, which hurts the economy, etc.
Even if the wealthy and the next two levels down could cover the debt – and they truly cannot – congress would just raise the debt ceiling and spend that money too and we’d be back to the debt situation we’re in now, but everyone would be poorer at the same time.
Project 2025 and DOGE need to be implemented ASAP
After WW II, the national debt was very high. But it was paid down just about every year until 1981, when Reagan reversed it and started the trend of increasing debt. The main reason it was paid down was that the marginal tax rate was 90%. Bring that back and in a decade there will be a balance. Of course it will not happen when the very rich own the government.