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A Thought on America's Economic Course

Last week, we growled whether the federal government is a 'going concern' --a principle in accounting that assumes a company will continue to operate in the foreseeable future. We also commented on the 2012 annual financial report of the federal government.

In today's Washington Times, Richard Rahn, a senior fellow at the Cato Institute, begins an op-ed this way:

"The current debate about the debt vote is minor league compared to what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think. It is true that the U.S. government can always “print” money to pay its bills, but at some point, printing more money becomes self-defeating because the resulting increase in the government bond interest rate and required interest payment will spiral out of control. At that point, the government will be forced to operate on a pay-as-you-go basis, as any individual or business is forced to do when they can no longer get credit. Several California cities are now in this situation.

"The U.S. government now receives about $200 billion a month in revenue and spends about $320 billion a month. Any responsible business or individual faced with a situation where receipts are only 60 percent of expenditures would make changes before their credit was cut off or, at the very minimum, have a plan for which bills to pay first — but not the U.S. government."

Rahn concludes the op-ed saying:

" , , , The current spending and debt crisis eventually will force debate on the role of the federal government — which programs necessitate taxpayer funding and which can be eliminated. The time is closer than most think — just ask any Greek citizen or resident of Stockton, Calif."

Arlington taxpayers concerned about the economy and the state of the nation's financial management are urged to write their members of Congress. Contact information:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376
And tell them ACTA sent you.

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