Of the so-called powers of Congress, there are 18 in the body of the Const., many implied throughout the Amemdments, and some dozenish granted formally in Amendments. Of the Article I, Section 8, "body powers", I wish to consider the power to "borrow on the credit of the US" and the power to "make necessary and proper..., etc., laws".

To me, all the Const. powers are not only powers, but also duties. And the duties are to ensure that the powers are used well, and are not just declared to be, but are shown to be "necessary and proper" when exercised. What I see is the robust exercizing of the powers by "public servants", most of which is more power grabbing, and little or no "necessary and proper" justification of what is done by/with the powers.

I feel strongly that what the "necessary and proper" requirements are must be the statements of purpose in the Const. Preamble (a past post topic), the Bill of Rights plus 4 (ie the next four amendments), minus the 13-th and 14-th Amendment's last lines giving Congress power to...., that they already have under the "necessary and proper" clause. (The rest I'm leaving as "no comment items" for the moment, in part to leave room for your wishes to fit into this topic.)

What I see in the National Debt, is the operation of non-necessary and improper slush-funding that is a hidden tax upon us all, as laws of supply and demand raise the interest rates all of us must pay due to this undue demand put on the loan markets, "a too much used" gamesmanship opportunity for those in power, to cripple those who might win in a change of power with a reduced borrowing capability should it ever be needed in a real emergency, and an unconscionable debt, no differenent than a punishment, passed on to our progeny "un-necessarily and improperly".

For me, it's waste, fraud and abuse by my government's "office holders", that is to be ended. I personally want formal govt. accountablility on this!

I propose to you for debate:

1. Is the National Debt now out of control, out of "necessary and proper" use, and a weakening of a power that might truly be needed "necessarily and properly" in the future?

2. What is your fix, if any, for this state of affairs? And, is it not more holding govt. to what is "allowed as necessary and proper", before making the more common suggestion for a National Debt amendment?

1. Is the National Debt now out of control, out of "necessary and proper" use, and a weakening of a power that might truly be needed "necessarily and properly" in the future?

I guess we need to define "out of control". The national debt is certainly higher now than it has been at some points in the past. Keep in mind that it makes no sense to say : the National Debt is "X" dollars. It must be expressed in relation to something else.

As a comparison, does it make sense to say that LeBron James owes $100,000 his credit card (hypothetically) without saying that LeBron makes $40 million a year? Now if I owe $100,000 to Capital One, it is a different story.

One such relation is the percentage of GDP. Currently, the national debt sits at about 66% of GDP. The rate of growth of the national debt is about the same as the rate of growth of the furniture industry: Source. As that page asks: is there a crisis in the furniture industry with run away pricing/cost? No, it's called inflation.

Now, given the following statement:

we can examine the historical data to see if this is accurate.

As we can see from the linked graph, the recent low period of National Debt as a % of GDP was during the Carter years (late 1970s). It hit its recent bottom at 32.6% in 1981. If the above statement is true and the national debt raises interest rates due to a supply and demand relationship and too much demand for loans (the "Crowding out" effect) then we could expect interest rates to be higher today than they were in the early 1980s. The prime rate in the last ten years has not followed this trend: See graph. 30 year fixed rates have been declining while the federal debt as a percent of GDP has been rising: Historical interest rates.

We can also look at the current debt level the US has and compare it with other countries. Japan's national debt is currently over 150% of its GDP. If our debt is too high (64.7% of GDP), than so is the debt level of France (64.7% of GDP), Canada (65.4% of GDP), and Germany (66.8% of GDP). Source: CIA factbook The leaders are Chili (3.9%), Hong Kong (1%). Mexico is much lower than the US (20%) but their economy is not that great.

The bottom line: there is no direct correlation between national debt and interest rates. There is some correlation with regard to strength of the economy, but it is tenuous. Our current debt level is neither unprecedented nor harmful to the economy.

My "out of control" concern is: Is it a "necessary and proper" means of funding by Congress? Is not the necessary and proper way to fund things the direct methods of open and balanced budgets? Would you not know more certainly "How fares the Nation?", a semi-quote from Daniel Webster and the Devil, then?

That the National Debt is "X" dollars, to me, must be expressed in relation to the "something else" of valid "necessary and proper" use in all its aspects. To me, that only fits for emergency and unexpected expenditures use, and is to be used only then.

We can, of course, examine the historical data to see if this is accurate. But why not also examine the costs and benefits of it in all manners, i.e. the supply and demand theories, and their fit to "all", not just "some historical data", the presence of "hidden costs and benefits" of a balanced or unbalanced budget, the "risk models" of each, the public transparency or opacity of govt. spending, and the hidden premise of a previous post that an analogy to commerce, and "the economy" of business and/or other countries, is an acceptable means of analysis for "necessary and proper" or "wise and sensible" for a land of the free. None of this has happened adequately to my knowledge.

Our current debt level may well be neither unprecedented nor harmful to the economy. But is it's present use "necessary and proper" for liberty and justice, etc.? Is there not already an "established necessary and proper" way to budget, authorize, allocate and tax, to get our "programs"? We are in this "game" for much more than just "the economy" or for the practices found by what, to me are, tenuous analogies to other countries and/or businesses, as opposed to our nation and its priciples. These and their models are of course interesting; but they are not sufficiently conclusive to be used as sources for insight here.

1. Is the National Debt now out of control, out of "necessary and proper" use, and a weakening of a power that might truly be needed "necessarily and properly" in the future?

Of course it is. It is a means of politicians buying our votes and having future generations pay for it. Functioning in a debt environment to fund temporary needs is not a problem...doing so continually is a HUGE problem. It means our government doesn't earn enough money to pay its expenses. Sooner or later, this will have disastrous consequences. The only question is when. As the debt gets larger and larger, the government's ability to continue to borrow money to fund it will decrease, and the interest rate they have to pay for that funding will increase. Since paying interest on the debt (yes, just interest...almost never anything towards the principal) is about the largest government expense, this will cause the government to have to borrow even more just to fund current expenses....causing its interest rate to go even higher, and so. Anybody with a checkbook knows what happens when you keep spending more than you make. Yet we continue to allow our government to do this. It's baffling.

National Debt Clock



Do YOU have $30,000 just lying around to pay your share off? Are YOU getting your money's worth from your government considering that debt? Keep in mind that this is on top of anything you pay on taxes.

2. What is your fix, if any, for this state of affairs? And, is it not more holding govt. to what is "allowed as necessary and proper", before making the more common suggestion for a National Debt amendment?

The fix is both very simple and incredibly complex. The government needs to stop spending more than it makes, and in fact actually start paying off the principal (we waste hundreds of billions of dollars each year just to pay the interest on this debt...that is money that is completely wasted, as we get nothing for it). Of course, this is politically very, very difficult. Politicians have sold us all on the 'free lunch' for decades...suddenly taking away the golden goose isn't going to make people very happy. Especially since most people don't really seem to care. That is the part I find most baffling. Our government is doing an Enron, with the same inevitable end, and no one cares.

The national debt is absolutely out of control, and I am blown away by those who think otherwise. If nothing else, the government's financial situation is a clear signal that it is exceeded its Constitutional authority. How else could it collect taxes to the tune of nearly $3 trillion (http://www.fms.treas.gov/aboutfms/what.html) and still have to borrow? The interest payments on the national debt were over $400 billion in 2006 (http://www.federalbudget.com). Our government could use this money to achieve useful purposes (like tax cuts) rather than just letting it evaporate to interest payments. It doesn't matter how our debt compares to GDP, it is a lot of money (app. 20% of the entire federal budget!) that could be better used elsewhere. If the deficit is truly "no big deal" as has been asserted in this discussion, why don't we just pay it off and be done with it? The debt is only accelerating, so at what point do we begin to call attention to the fact that we have a debt problem? How about NOW, before it gets any worse!

Here is what the Government Accountability Office has to say about our financial situation, and one would assume they know what they are talking about:


Speaking of "tough choices," a recent issue of The Patriot Post reported that, Senator Bob Bennett from Utah recently offered a prime example of this mentality. Asked about deficits in a recent interview, he replied,

So what, exactly, is Bob Bennett “going to do?” Sit around and wait to see if deficits are “less than projected” and then take credit for it? This hardly sounds like a solution.



What we need is permanent change, including a balanced budget amendment. A good first step would be to institute a law that I call “pay for performance.” Under this law, a high percentage of congressional pay would be based on the ability of legislators to balance the budget. A portion of legislators' salaries would be set aside at the beginning of the year, and if they manage to balance the budget they'll receive it at the end of the year. If the budget doesn't balance, this money will go towards paying down the deficit. Wealthier congressman and women won't notice the hit to their wallets, but they will notice the hit to their egos via bad publicity if they fail to meet their goals.

We need to write our representatives and tell them we've had enough of their fiscal mismanagement and demand a new era of accountability in Washington.

Freedom from national debt is a worthy goal, one that our children will thank us for achieving. Let's start a few brushfires this week.

Let's not mischaracterize what I wrote.

The question asked was "Is the National Debt now out of control, out of "necessary and proper" use, and a weakening of a power that might truly be needed "necessarily and properly" in the future?"

Just because something is not "out of control" does not mean it is not problematic.

As was referenced, the real looming threat is not the current budget debt, it is the unpaid for social services in the form of Social Security and Medicare. These benefits are unpaid for and are a looming problem, totaling more than five times the National Debt. That is the real problem, and yes Congress has financed them without collateral.

The National Debt is on the same scale in the United States as it is in most Western countries.

As for "necessary and proper"-- there is no such stipulation on the Congress's ability to borrow money on the credit of the United States:



In fact, it is the second power named, after that of being empowered to lay and collect taxes.

Again, I may disagree strongly with how the Congress has spent the money of the people of the United States. I may disagree with the current interpretation of "general welfare" that is used to give money away willy nilly to every special interest group with its hand out. That does not mean that currently the budget and debt situation of the United States is "out of control".

I agree with this statement, but consider this for just a moment. What this is saying is that the current $3 TRILLION dollar debt is not even the real problem. Picture Dudley Moore stating in a drunken slur "..and that was when $3 Trillion was actually considered quite a lot of money". We have become so inurred to this that we're at the point where the public has been led to actually believe that this staggering amount of debt is no big deal. When you look at the current debt, then at the Social Security crisis, and then at the even larger Medicaid/Medicare issue, we're stuck inside a burning building in the middle of a city that has been targeted by multiple warheads during a looming global nuclear holocaust. Each problem so dwarfs the other that the first seems to be no big deal, yet all of the scenarios are disastrous.



Great...so every other Western country is in the same dire straghts that we are. that makes me feel better. Let me draw a simple analogy...if every person in the Western World had an unsustainable level of debt, and that debt was expected--no, certain--to increase dramatically in the coming years, would that make it ok? Of course not. Well...that is EXACTLY the situation we are in.



Which is exactly the problem. There is no limitation on Congress' ability to borrow money--only on their ability to pay it back.



Great...give the kids the key to the candy jar. That seems to be working....

Whatever happened to the 'pay the debts' part? That seems to have been conveniently forgetten. Wouldn't that qualify as dereliction of duty?



Hmmm...seems pretty clear to me.





No, the fact that we run continuing budget deficits, and that these deficits are expected--no, certain--to reach unsustainable levels means that the budget and debt situation are "out of control". In short, the fact that there are no controls indicates that it is indeed out of control. This is really very simple. If an individual or a company maintained the fiscal policies and debt level that our government was, there would be universal acceptance of the fact that their spending was out of control, and that they were doomed to financial ruin. The fact that it is our government that is doing it doesn't make it ok..in fact, it makes it much, much, much worse, as the scale and consequences are far, far, far greater. We will soon approach the point where the 'perfect storm' of government spending will hit. Soaring budget deficits caused by the looming Social Security and Medicare/Medicaid crisis will cause interest rates to soar. This will further reduce the government's ability to meet those obligations, causing interest rates to soar higher. Then we will either have to massively reduce spending or enact massive tax increases, or almost certainly both--which will cause a sharp recession/depression, further reducing the government's revenue while also increasing its need for spending. In short, financial meltdown. If THAT doesn't describe 'out of control' spending, I can't even fathom what would qualify.

Had the question asked about promised future spending, our answers would be the same, I think, Hobbes.

As it is, does the current debt/deficit scenario describe a situation that is "out of control"? I think it doesn't and you obviously disagree.

What you are missing, is that unless there are sudden changes in the debt level of the US, everyone in the financial arena is aware of and comfortable with, what is going on. That means it is indeed sustainable. The fact that the debt level is lower today (relative to GDP) than it was in the "good old days" of Truman and Eisenhower.

But the looming problem, the entitlement problem, is outlined Here.

Well, I tend to view the two as one-and-the-same, since it is the current mindset (and lack of control) that has led to the looming problem. The mindset being that politicians have discovered that they can buy current votes now, and have other people pay for them later.

As for the current levels, irrespective of future promises, I would still say they are both out of control, and currently very harmful. Control in a financial situation would be exemplified by living within ones means, and that hasn't been done (outside of an anomoly during Clinton's administration) for decades. It is therefore by definition 'out of control' from a process management standpoint, as an 'in control' process would center on averaging a balanced budget. (It also wouldn't involve stealing from a trust fund, but I digress). As to the current problems this presents:

1. Is the National Debt now out of control, out of "necessary and proper" use, and a weakening of a power that might truly be needed "necessarily and properly" in the future?

I'll answer the latter part, which then I think answers the first two. Consider that our budget is stretched tight enough that we have very little leeway for emergencies. Think back to the Gulf War, when we had other countries fund the use of our troops there. Why? Although we put lots of diplomatic spin on it, the answer in a nutshell was that we couldn't very well afford it. We couldn't afford to fund our very own defense (or at least chose not too). Is that not a scary scenario?

A worse scenario, even with current debt levels, is that we are highly exposed to swings in the interest rate. Interest rates are still at fairly low rates--having them double or even triple is well within the realm of possibility. If interest rates doubled or tripled, then the amount spent financing that debt would double or triple. That would increase federal spending by several hundreds of billions of dollars. That is the amount we currently spend on defense, HHS, SS, etc. Do you think our current budget would easily handle doubling expenditures on those programs? Not hardly.

There is also the simple issue that the hundreds of billions of dollars we spend each year in interest is hundreds of billions of dollars each year that we don't have to spend on anything useful. For example...this is money that could be going towards addressing the looming SS/Medicaid crisis, but can't, because it's tied up paying interest.

Finally, consider that much of the debt service undertaken to fund this debt is done for foreign governments...essentially putting our financial future in their hands. What if they suddenly decided to stop buying? Interest rates would then immediately rise to entice others to buy, having undesirable consequences on our economy while also burdening our federal government with additional debt service fees.

If you combine all of these issues, it is easy to see that we have a definite weakening of power that might truly be needed 'necessarily and properly' in the future.



Aware of....yes. Comfortable with? I don't really think so. Foreign entities have been investing elsewhere, and even domestically the level of debt is a source of concern. However, it is still a viable investment compared with other possibilities--as you stated, our debt level is in line with other Western governments. Plus, the government has an inherent advantage when compared with corporate bonds...it can always just print money if it needs it. So, it has a lower risk associated with it. The trend is not good, though. U.S. Bonds used to be thought of as rock solid investments..the risk wasn't even questioned. Now, it is, and institutions are starting to invest elsewhere.

What can be done about this? Well, that of course is the kicker...

2. What is your fix, if any, for this state of affairs? And, is it not more holding govt. to what is "allowed as necessary and proper", before making the more common suggestion for a National Debt amendment?

Yes, I do think we should hold government to a 'necessary and proper' standard. I think this should be done by having any new legislation also include a section indicating how it will be funded. This is not currently done. Further, I think Congress should have to explicitly lay out why any funding over and above its expected revenues (ie, the expected deficit) is 'necessary and proper' in order to receive funding for it. In short, some form of fiscal sanity needs to start to be exercised, and budgets need to start becoming in line with revenues.

Ideally, I would go beyond simply balancing the budget, and require Congress to come up with a plan on how to pay off the current debt..funding for which would have to also be explicitly laid out. Unfortunately, I think we're already at levels that make this difficult. Not only would this require political capital, but there's also a very real chance that directing funds toward this would require spending cuts or tax increases that might well have negative short term (many years) impacts on the economy. Picture an individual who is deeply in credit card debt,. What happens to that persons lifestyle if he then cuts back on expenses in order to pay off his debt? Well, it goes down, doesn't it? That lifestyle translates into our national economy...if the government spends less money, then less money is going into the economy, which has a trickle down effect throughout the economy. I think the usual figure used is 7 to 1...for every dollar the government puts into the economy, 7 dollars of output are created. Therefore, paying off the national debt might have a deleterious effect on the economy, at least in the short term. However, I think it has to be done sometime, and its only going to get larger, and we're only going to continue wasting money on interest until it happens. The negative impacts should be at least partially offset by lower interest rates, spurring additional growth.

I completely agree on this point. This is closely related to our debt problem in that these entitlement programs will cause the national debt to grow unsustainably. What we are seeing now is just the tip of the iceberg unless our elected leaders realize that government's primary purpose is not the spoon-feeding of American citizens.


This is an interesting argument. So the fact that people were aware of and comfortable with the exponential increase in tech & telecommunications stock in the late 1990s meant that it was sustainable? There were very few naysayers prior to the dot com crash in 2000, yet somehow it crashed. People in the financial arena will always be "aware of and comfortable with" anything that lines their pockets. They are characteristically more interested in short-term results than long-term consequences.

In Utah, we're running out of room to build houses, so developers are building anywhere they can find -- in old gravel pits, on top of the Wasatch fault, in flood zones, on former landfill sites, etc. Developers are selling homes & lots, city councils are approving them, so it most be okay - right? Perhaps this logic could be used to persuade some, but not the people whose homes were destroyed in mud slides--in two different cities in the last 5 years--because they were built on steep mountain slopes with minimal vegetation.

The people of Pompeii were probably pretty comfortable living near Vesuvious, but it didn't mean their way of life was "sustainable."

Risk is a part of every day life. When we get into a car, for example, we risk getting into an accident. Most people willingly assume this risk, but would never knowingly get into a car with a drunk driver. Why? Because this is an unreasonable and unnecessary risk that is virtually guaranteed to have negative consequences. Debt, like alcohol, increases risk. The only thing left to determine is how much risk we as a nation are willing to take on. I am convinced that fiscal mismanagement and entitlement programs have set us on a course towards insolvency, and if we don't start to turn the rudder now, we'll soon find ourselves on a sinking ship. How much more debt does our government need to acquire before it finally admits it has a problem?

It was suggested that tests of "lack of correlation" indicate there is no debt problem. I understand that correlation tests is one of the tools of social problems. However, for our present state of economic "science", I believe we have gone beyond that level.

One such is game theory methods. FYI there is a paper by Arrow (yeah the Econ Nobel Laureate) that does an illuminating game theory model of "Fiscal/Monetary Policy" folks vs "Growth Economy" folks that literally pits the National Debt against Inflationary trends of over-growth. It relies upon and assumes as necessary, supply and demand rules for debt!

If I find the ref again I'll post it.---Lek

The promised reference from the April 19 post is/are:

For general readers info and background:

Bernstein, P.L., Against the Gods, the Remarkable Story of Risk, John Wiley and Sons, New York, 1996, all of the book, but especially Chapt 14, and more especially pp 240ff on Blinder.

For the more technically inclined:

Blinder, A. S., "Issues in the Coordination of Monetary and Fiscal Policies", Monetary Policy Issues in the 1980's, Kansas City Missouri: Federal Reserve Bank of Kansas City, pp 3-34.