Sometime between early March and mid-April the federal government will hit the current public debt limit of $14.294 trillion. The current ceiling (why didn't they just make it an even $14.3 trillion???) was signed into law last February 12 (what would good old Abe think???) from the prior limit of $12.394 trillion.
That means that the federal government rolled up almost $2 trillion dollars of debt in a little over a year! It is almost incomprehensible. Let me put that in perspective for you. That is about $19,000 of additional debt for every household in the United States. It makes you wonder why we didn't just send $19,000 to all 100+ million households as a stimulus package. More sobering is the fact that the U.S. will collect less than $2 trillion from individual income and FICA taxes in 2010. We spent all that and added $2 trillion on top of it in new debt. This means that we essentially spent $2 for every $1 that individuals paid in taxes in the last year. It's like you making $50k and spending $100k.
How do you fix it? The math is pretty simple. Double all individual and FICA taxes. Cut spending in half. Some combination of the two. The math may be easy but there is nothing simple about the solution.
There are no good solutions from this point forward...only various forms of pain.
It looks to me as if the real tough decisions are going to begin with the upcoming debate over raising the debt limit. Many Republicans have signaled that this will be a real debate. There also will be a direct vote. In the past, members were not required to put their name on votes on federal debt limit increases. They were done by voice vote or put in a package deal. Only in Congress can you get a $2 trillion line of credit and not have to sign for it. Speaker Boehner has ended this practice.
What will be interesting to see is how the Republicans play this. What do they have to get to gain the support of the majority to raise the limit? They very effectively boxed in President Obama in December on the tax cut with the help of the "shellacking" (the President's word for it) the Democrats took. In politics, it always helps to have the voters on your side.
Having the voters covering your back is a lot easier when it comes to holding the line on taxes than cutting government spending. The Republicans have a real opportunity to get the country back on the road to sanity this Spring. However, they will only be able to go as far as public opinion takes them. People need to know the facts. Forward the first 3 paragraphs to someone you know. If you are under the age of 40, forward the first 3 paragraphs to everyone you know! The bet is about to get raised again. How high do you want the pot to go knowing your (our) cards look like this?
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