All the self righteous howling about out-of-control deficits notwithstanding, we should all utter a silent prayer of thanks that when it came to saving the economy from the abyss in 2008 and 2009, saner elements of both parties – including presidents Bush and Obama, their Treasury secretaries and the chairman of the Fed – borrowed trillions to stave off disaster, and the heck with how big the deficits got.
We’ll never be able to prove how horrific things would have been had they not done that, since, of course, the catastrophe never happened. So critics are free to rant about how irresponsible it was to make deficits so big. Maybe they go home after a day of this and utter a silent prayer of thanks as well. They should.
But let’s move on. With the economy clinging to a modest but persistent recovery but the national debt still growing at a frightening rate, it's time to start being much more careful about borrowing money. The Office of Management and Budget projections show the debt held by the public headed to almost 80 percent of the Gross Domestic Product for the first time since 1950, when the nation was emerging from a real economic abyss and a global war. We're not Greece yet, not even close. But the bond vigilantes who drive up interest rates for countries that can't handle their fiscal affairs are on the prowl, and the U.S. federal debt is starting to look pretty profligate.
Which brings us to the American Jobs and Closing Tax Loopholes Act of 2010, which sponsors would like to pass this week, before Congress takes its Memorial Day recess.
The AJCTLA is a typical congressional Christmas Tree – expensive and full of lots of unrelated stuff that got thrown in there because this is a must-move bill. There's an extension of unemployment benefits and the COBRA health insurance subsidy for the unemployed, the so-called Medicare doc fix, extensions of expiring tax provisions, infrastructure incentives, etc. The total cost, the Congressional Budget Office says, is $174 billion over 10 years. A fight has broken out over whether it should be paid for, or borrowed for.
It’s time to start paying for measures like this. So far, congressional Democrats have raised only 23 percent of the cost of the $174 billion bill, all with about $40 billion in tax increases. Much of the rest would be written off as "emergency spending" exempt from pay-fors. In other words, backers of the bill are fine with adding another $134 billion to the debt. And they're apparently unable to find any spending anywhere they might cut to help offset the new spending in this bill, even over the long haul.