Debt ceiling bill passes U.S. House!!!

… it’s likely the debt ceiling limit will be raised without a whimper
– Azleader, Obama signs massive SNAP farm bill, 2/9/2014

This author wrote that line two days ago in the introduction to an article about federal spending that highlights doubling long-term budgeting for food stamps. Food stamps are now up to a staggering $756 billion dollars total over the next 10 years.

In a surprise move this afternoon, the U.S. House of Representatives took up and passed a “clean” bill to raise the debt ceiling. It won’t impose any restrictions to future federal government spending. The limit will simply be raised. No fuss. No muss. No discussion.

It guarantees its passage in the U.S. Senate to earn President Obama’s victorious signature. USA Today reports the new limit will again kick the debt can down the road, this time to March of 2015.

The Sunday farm bill story speculates that passage of the massive farm bill and the bipartisan budget last month might be harbingers of a return to unrestricted, spending-as-usual by the U.S. Congress.

The farm bill story ominously concludes with these lines:

Passage of the bipartisan budget and the massive farm bill signals that Congress has decided, once again, to kick the debt can down the road to leave tough spending decisions for a future generation of lawmakers.

Lip service will be given to fiscal responsibility, but in the end the debt ceiling will quietly be raised without fanfare in this election year.

Things won’t change until servicing the national debt itself becomes the federal government’s largest yearly expenditure.
– Azleader, Obama signs massive SNAP farm bill, 2/9/2014

Reaction to passage of a “clean” debt ceiling bill

Liberal pundits gleefully announced that Republicans caved on the debt ceiling. Yea! Victory for us!

The more savvy pundits speculate that Speaker Boehner rushed this bill through in order for Republicans to avoid another no-win, divisive debt ceiling debate that threatens economic recovery. They say voters would punish the GOP for that later on.

By pushing the bill through now it allows Republicans to laser focus single-minded attention on Obamacare, which increases their chances of winning back the U.S. Senate in the mid-term elections later this year.

That may be Speaker Boehner’s reasoning. It may work. It may not. Only time will tell.

Conclusions

The bottom line is that before today the Congress was already showing signs of caving into the big government spending bug again.

Unfortunately, raising the debt ceiling isn’t just a political tool one party can wield as a weapon against the other. It has lasting consequences for future generations.

Last year, servicing the national debt cost $416 billion dollars. That was when U.S. Treasury bond yields were near their lowest rates in history.

Today, Treasury bond yields have doubled from their historic low two years ago. Yields will only go upwards from here as the economy sputters back to life. Corporations hold trillions of dollars in U.S. Treasury bonds. That is where QE generated money is stored. Eventually cashing out those trillions will drive up yields over the next several years.

When that happens the yearly interest paid on unrestricted federal spending will double to $800 billion/year and then to $1 trillion/year or more.

When that happens – heaven help us. Heaven help our grandchildren.

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