It should come as no surprise the nation’s debt causes money-management headaches for the U.S. Treasury. After all, just the interest on the debt cost the government —meaning us all — $30 billion in March alone.
The Washington Post reported this week those headaches are headed toward a crisis: a possible failure of the Treasury to have enough cash on hand to pay the bills.
The problem, the nonpartisan Congressional Budget Office says, is that income is down, and the CBO lays partial blame for this on wealthy taxpayers and businesses who are delaying financial transactions in the hopes Congress will soon lower tax rates.
As the CBO puts it, “taxpayers shifted more income than projected from 2016 to later years, expecting legislation to reduce tax rates.”
There’s no reason to doubt this is true, but it’s wrong to scapegoat law-abiding taxpayers when the finger should be pointed directly at Congress.
And it is a sad statement about our country’s finances that people “failing” to sell stocks or real property has pushed us to the brink of a disaster, one that could lead to a spike in interest rates or stock market collapse, among other problems.
The CBO says revenue is about 3 percent off forecasts. That’s a lot of money — $60 billion to $70 billion — but let’s scale that down to a personal level.
For a Walla Walla County resident making $40,000 per year, around the median income, a shortfall of 3 percent would be about $100 a month. That’s real money, but probably not enough to get your phone ringing off the hook from debt collectors.
We understand government isn’t like business or personal finance, but the comparison isn’t completely unfair. It is ridiculous Congress can’t sort out how to bridge what looks like a manageable shortfall.
The usual solution to the cash flow problem is for Congress to raise the limit on how much money the government can borrow. But more borrowing will just push that $30 billion-per-month bill for the interest upward.
The Post notes that in previous crunches, the Treasury has notified Congress of the exact date it will run out of money. This time around, Treasury Secretary Steve Mnuchin hasn’t offered specifics, though he has asked lawmakers to raise the limit by August.
Kudos to Mnuchin for not giving a specific date. That would give lawmakers a way to bicker about tax hikes and spending cuts until the last minute, and then raise the limit just in the nick of time.
We’d prefer to see Congress use the next two months to tackle the issue head on and hammer out a realistic, even if only short-term, plan for bringing spending closer into line with income.
Better that than borrowing a little more time and burrowing deeper into the red.