About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

2 Washington News 1 (1986)

handle is hein.tera/wingnews0039 and id is 1 raw text is: TAX FOUNDATION SPENDING ANAIXSIS W*@A*9S*#H*I*N*sG*#T*O* N N.EWVS Volume 2, Number 1 June 10, 1986 Federal Debt: Onward and Upward As Usual? The Federal government's debt went over the $2 trillion mark on April 3, 1986, and was expected to increase by another one- quarter to $2.5 trillion in the next five years -- even if the Gramm-Rudman-Hollings Deficit Reduction Act of 1985 achieves its stated deficit-cutting goals. Few in Washington expected GRH to be that successful. When this report went to press, the House and Senate were still arguing over how to put a lid on deficit spending, which creates new national debt, in the next fiscal year (1987) starting October 1, 1986. If Congress failed to implement the fiscal discipline required by GRH in its opening rounds, it would be taken as a signal that debt dependence will continue to be the way of life in Washington -- for as long as the money/credit system holds up. One small step. The first small step toward Slowing the creation of additional Federal debt -- a reduction of about $11 billion or 4.2% in agencies' outlays in fiscal year 1986, ending September 30 -- caused widespread political heartburn in the Spring of 1986. Veterans on the Washington scene were looking for strong efforts by various groups wired into Federal subsidies to circum- vent even this modest step back EXECUTIVE SUMMARY Since the New Deal greatly enhanced the intervention of the Federal government in the economy, the indebtedness of the national government has been growing almost without letup' In the 40 years since World War II ended, the Federal budget has been in balance 8 times. The budget was last in the black in 1969. The nramm-Rudman-Hollings Deficit Reduction Act of 1985 could be a start in the right direction. By the time fiscal year 1986 ends September 30, the nation should know how serious Congress is about ending debt dependence. Washington is not the only culprit in our national debt binge, however. Some states and local governments, countless individuals, farms and businesses have piled up a mountain of debts that, added to Uncle Sam's IOUs, now total more thap $7 trillion, twice the amount of debt outstanding just six years ago. The distress in the oil belt and the farm belt, with its disastrous impact on banks and their borrowers, shows how vulnerable a highly leveraged economy is to downticks. Voices of caution have been raised. The big question is how much heed will be given to them. from debt financing, through back- door maneuvers such as supple- mental appropriations or creative accounting in trust funds. And the budget for fiscal year 1987, starting next October 1, will add another $140-$150 billion to the national debt -- or more, if the economy slows and revenues don't match projections. Washington's debt binge has been going on with few interrup- tions for more than 50 years, and it seems unlikely to end in the next five. The binge began when the Great Depression of the early 1930s brought the advent of the New Deal, vastly expanded govern- ment intervention in the economy, and a new way of looking at debt. Priming the pump with Federal deficit spending became the norm. In the 40 years since the end of World War II in 1946, Washington has had 8 balanced budgets. The last was in 1969. On the other hand, the Gramm- Rudman-Hollings law could be a hopeful start toward balanced Federal budgets -- if Congress stays the course. Slow Down Urge. Several trends came together to promote a revived awareness in government and financial circles of debt's dangers and costs to the economy, and the urgency of the need to put the brakes on debt accumu- lation. The most fundamental develop- ment is a change in the political climate. Earlier economy drives in Washington faltered, but in the Spring of 1986, there appears to be a solid political base for a drive to curD the growth of Copyright 1986 by Tax Foundation, Incorporated, One Thomas Circle, N.W., Suite 500, Washington, D.C. 20005 (202) 822-9050

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most