The debt, the deficit, and the balance of trade

I heard a recording of some lawmakers on Capitol Hill this morning discussing the financial crisis and became aware of the fact the people driving this bus don't know there front end from the back up gear. This of course comes as no surprise to you. How many of our lawmakers know the difference between the debt and the deficit? How many of our voters who vote them in? And more importantly, how many Americans know the relationship between the debt, the deficit, and the balance of trade.

As a good republican I am not allowed to speak kindly of anyone named Clinton. However, in the Clinton years I agreed with the man on a couple of things. One was that we should not spend more than we take in. Granted, it was because of what has come to be called the "Clinton TAX" but it is a fact that during the second term of the Clinton budget our deficit actually went down.

This has been the battle cry of the TEA party. Spend no more than you earn. Of course, they (I) want to reduce taxes but doing so without reducing spending is a problem. A fifteen Trillion Dollar problem.

Which brings us to the point of this Blog. The current "debt limit' for the US of A is 14. 3 trillion dollars. We are fast approaching that number with the expected cost of the foreign wars we cant win and the domestic programs we can't afford scheduled to push Uncle Sam's credit card debt beyond Fifteen Trillion Dollars.

This coupled with the funny way we calculate gross domestic product. ( Katrina boosted our GDP by $20 Billion) means we now owe seventy five time the amount of goods we actually produce in the US of A.

I remind my gentle reader that gross product includes things like selling a mule to your neighbor and then buying it back next week when you need to plow is putting the price of the mule into GDP twice. In reality only the plowing is value added production!

And that only in the fall when the Punkins are ready for the pickin.

If we put every punkin we can produce into the pot for the next 75 years we can't pay the debt.

This should be heavy on our mind if we allow our lawmakers to raise that debt limit again when Congress Reconvenes next year.