Houston Democrats

First, actual revenue coming into the government is in fact decreasing, despite the recent claims of rightwing economic mouthpieces (I would call them economists, but their reputation is already low enough). According to the Congressional Budget Office, receipts from individual income taxes have decreased 18% since 2001, from 994.3 billion in 2001 to 809 billion at the end of 2004. Corporate receipts have increased 25%, but that increase is misleading because total corporate receipts in 2004 were only 24% of the individual total receipts. Much smaller in total than individual and corporate receipts, estate and gift taxes decreased 14% over the same time, falling from 29 to 24.8 billion.

Over the same time period (2001-2004), the Republican controlled Congress increased discretionary spending 33%. The Defense Depart was the largest recipient, receiving a 48% increase in spending. Other domestic also increased 27% over the same period.

In other words, the Republicans have not only clearly violated their “fiscal conservatism” principles, they have once again increased total US debt. In 2001, the total amount of debt held by the public and governmental agencies was 5,807,463,412,200.06 on September 28, 2001. On September 1, 2005 the total amount of debt increased 27% to 7,929,658,283,890.28. The policy of tax cuts and a voluntary war – the classic guns and butter economic problem – have placed the country is dire financial straits from which payments for a foreseeable natural disaster will only increase the Republican created fiscal disaster.

And that is where the problem comes in. Because the government is the de facto insurer of last resort, it’s finances must be in good shape in order to be the insurer of last resort. If the US had a clean bill of fiscal health right now, the Treasury could go to the bond markets over the next few months and sell the needed debt to pay for Katrina’s damage. As it stands, the federal government’s position as insurer of last resort will simply increase its total debt to over 8 trillion dollars – roughly 70% of US GDP. Interest payments on the national debt are already one of the largest spending categories of the national budget. And they stand to increase.

In short, Katrina – a foreseeable and ill planned for national disaster – will also increase the US’ disastrous fiscal position. While it won’t take us over the brink, it does take us 1-step closer to the cliff’s edge.