President Bush recently signed into law a bill to raise the ceiling on the nation’s credit limit, which will translate to an increase in the national debt. This has happened three times in the last four years, this last increase amounting to $800 billion. This bill was quickly followed by a spending bill, which will, as a side note, dramatically cut Pell grant money to college students beginning next year.
Apparently, the increase in the debt ceiling was absolutely necessary even though Bush has promised to cut the annual budget deficit in half in the next four years. A New York Times reporter wrote that "lawmakers ultimately [had] no choice in the matter if the government [was] to stay in operation." If the debt limit had not been increased, the government would have had to shut down. Yes, that’s right – the government would close for business.
How this works exactly is pretty complex and, under scrutiny, odd. The debt limit was raised so that the government could pay its bills. This was all supposed to happen back in October, but Republican leaders, fearing a loss of votes, postponed action until after the elections. In the last four years, the federal debt has gone from $6 trillion to $7.4 trillion and with the new ceiling will allow borrowing to hit $8.2 trillion. And it gets better. Lawmakers are predicting that it will have to be raised again sometime next year.
A large part of the increase in the federal debt is due to the wars in Iraq and Afghanistan, and, as described by the Democrats, Mr. Bush’s "irresponsible fiscal priorities."
The very same day that Bush signed the latest raise into law, Alan Greenspan, the chairman of the Federal Reserve, warned that "the United States’ persistently high current-account deficit in world trade pose[s] a risk to the dollar’s value, since foreign investors [will] eventually resist buying more American assets."
What that means is that foreign investors, those countries and banking centers that the United States borrows all of these billions of dollars from, are becoming increasingly weary of investing in a business that continues to lose money, which causes the U.S. dollar to lose its value in the world market. It’s these very same investors who finance the U.S. deficit by, among other things, buying U.S. treasury bonds.
A few days after the bill was passed into law, Congress, not wasting any time, approved a $338 billion spending bill. Attached to the spending bill was a host of last minute additions that will affect nearly everyone, including tens of thousands of college students.
The bill itself was over a thousand pages long and so the following is a short list of just a few of the more alarming additions to the bill:
1. The Environmental Protection Agency’s budget was dramatically cut and a provision to allow oil drilling in Alaska’s Yukon Flats National Wildlife Refuge dealt environmentalists a further blow.
2. According to Associated Press reports, another provision will make it easier for hospitals and other health care providers to refuse to provide or pay for abortions or even simply to offer abortion counseling.
3. The spending bill also allows the government to cut back and in many cases eliminate college grants "for hundreds of thousands of low-income students."
This last one hits home the hardest for a lot of us at PSU. According to The New York Times, perhaps "more than a million" college students will be affected, with about 84,000 students losing their Pell Grants altogether. Sen. Jon S. Corzine said, "They are throwing students out of the opportunity to seek a college education."
What I want to know is, how many of these students voted Republican?
You can learn more about how the U.S. government borrows and spends money at www.politicalmoneyline.com.
You can also voice your discontent with this new spending bill, and anything else that bothers you about government, by contacting Oregon senators and representatives at www.congress.org.
I am sending a copy of this article to them; they’ll be expecting your emails.
A.J. Jackson can be reached at [email protected]