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July 18, 2011 - Freedomain Radio - Stefan Molyneux
06:28
1956 The Debt Ceiling Is Complete Bullshite!

Politics is bad theater, don't panic my friends! From Freedomain Radio - http://www.freedomainradio.com References: http://www.fdrurl.com/ceiling

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The debt limit is nonsense.
Politics is bad theater by Stefan Molyneux, host of Free Domain Radio.
So why is the debt ceiling nonsense?
Well, over the past 10 years, the debt ceiling has been raised 10 times, sometimes even more than once in a single year.
Here's the chart. As you can see, it goes lockstep.
It's been raised almost a hundred times over the past hundred years.
It's complete nonsense.
The black bars here represent the time lag between the need to raise the debt ceiling and actually raising the debt ceiling.
Sometimes it's been a couple of months and everything's been just fine for the government.
Oh, and by the way, August 2nd, 2011, a completely arbitrary date.
Timothy Geithner has changed this date at least four times so far.
In 2011, we're just over halfway through.
There's not going to be a default on the federal debt, at least not in 2011.
Let's look at the numbers. To avoid a default on your debt, it's the same for you with your visa as it is for the government with its debt.
If you pay the interest, you're fine and your creditors are fine.
So fiscal year 2011 federal tax is $2.2 trillion, entitlement spending $1.6 trillion, other spending $1.9 trillion, net interest was $225 billion.
And given that the fiscal year is close to its end, government needs maybe 50 or 60 billion to continue to pay the interest on its debt.
It could find that just looking under the couch.
So there's not going to be a default.
That's important to understand.
This is why the bond markets aren't panicking.
Why are tax increases off the table for the GOP? Well, the last time Republicans agreed to one of these We'll give you $2 in spending cuts for every dollar in tax hikes was 1990.
And here's the graph about what happened.
So the promised spending cuts were over $250 billion.
But in fact, there were spending hikes.
The spending cuts never materialized.
All the tax hikes, as you can imagine, did materialize.
None of the spending cuts did. And there were, in fact, spending hikes.
So when Democrats or the party not in power offer you spending cuts, do not believe them.
It is all kabuki nonsense.
What happened in 1990?
Well, he was promised $2 in spending cuts, the president, for every dollar in tax hikes.
All $137 billion in tax hikes went through.
Top marginal tax rates went from 28% to 31%, and a setup for the 93 Clinton tax hike of this rate all the way up to almost 40%.
Increases in sin taxes and the Medicare payroll tax and so on.
And the $274 billion in promised baseline spending cuts, they just never quite materialized.
Baseline spending was actually $22 billion higher than what was projected before the deal.
This was despite another tax hike and baseline spending cut deal in 1993 and the GOP takeover of Congress.
In 1995. See, it doesn't matter whether you oppose or don't oppose the raising of the debt ceiling.
If you're in power, you want the debt ceiling raised.
If you're out of power, you'll use it to try and get your way.
The cause is, well, it's pretty simple to figure out why the debt ceiling has been raised 10 times in the last 10 years, since 2001.
The national defense programs have risen, spending has risen 70.5%, non-defense discretionary, 56% almost, Medicare over 75%, Medicaid over 75%, Social Security almost 40%, and other spending has risen over 64%.
Well, these people are drunk.
You give them more money, all they're going to do, like addicted gamblers, is double down, baby.
They will never, ever take the money off the table.
See if you can recognize this quote.
Yes, Barack Obama in 2006 voting against...
Well, you guessed it, raising the debt ceiling, which he is now begging Congress to do.
It's inevitable. You can't even call this hypocrisy.
It's so inevitable. Over the last 10 years, federal spending has increased by over 60% in inflation-adjusted dollars.
Last year, for the first time since new budgeting procedures were put in place in 1974, the government failed to actually pass a budget, despite the president's party holding both houses of Congress.
Between January 2008 and May 2010, the private sector lost almost 8 million jobs over the same time frame.
Public sector employment actually increased by a net 590,000 jobs.
And these people are seriously overpaid and underworked, my brothers and sisters.
Can we raise taxes to cover this?
Of course not. That is a fool's, fool's quest.
You can tax all of the billionaires in the U.S. every single penny they had and owned.
You wouldn't even cover the federal deficit for one year of the federal spending.
So between 2002 and 2007, state governments increased revenues by about 81%, four times faster than price inflation and population growth.
So imagine, you get four times your take-home pay.
What are you going to do? You're going to spend.
But governments do it in a different way.
So, because of this massive increase in state government revenue, if they'd simply had kept pace with price inflation and population growth, they should have had $2 trillion in reserves by the time the recession hit in 2008.
States first started taxing income in the 1970s.
Massive, massive income for the states.
So have they been in financial trouble ever since?
Of course they have. 45 states have a combined $125 billion shortfall for fiscal year 2012.
So you have to call it a shortfall, not a deficit, because states can't run deficits.
But you see, you give them more money, all they do is use it as collateral to borrow more.
Raising taxes will not help.
The $14 trillion total federal debt doubles over the next decade, even under the best case scenario.
Which is not even remotely going to come true.
So giving more money to the government is only going to make things worse.
So I just wanted to point some of this stuff out.
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We were a top 10 finalist in the 2007-2010 podcast awards.
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And you can find references for this show at fdurl.com forward slash ceiling.
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