by: Diane Benjamin
It’s easy, but I’ve never heard anybody say it! Since Congress doesn’t have a current budget, it has operated under the 2009 budget. The 2009 budget was the largest in history! Obviously the Democrats have no intention of cutting spending. So, instead of passing the House budgets, or even discussing them, they pass Continuing Resolutions so the massive spending can continue. The Republicans in the House then agree to the CRs or they will be blamed for shutting down government.
What is the effect?
Source: http://useconomy.about.com/od/usfederalbudget/p/FY-2009-Federal-Budget.htm
The worst effect of the FY 2009 budget was the $1.413 trillion deficit. It was the largest in history. To compare it to all other budget deficits, see How the National Budget Deficit Affects the Economy. However, it was needed to boost the economy out of the greatest recessionsince the Great Depression.
Deficit spending is nothing new with the recession. In fact, it has been a continual part of the federal budget since its beginning, with only a brief respite in the 1990s. However, since 2002 it has escalate dramatically. By the end of 2009, it had created a $14 trillion debt.
If it continues, deficit spending will weaken the dollar even more. That’s because the Treasury Departmentmust issue new Treasury notes to pay for the debt. This has the same effect as printing dollar bills. As the dollar floods the market, supply outstrips demand. Ultimately, the value of the dollar will drop.
As the dollar’s value decreases, it makes the price of imports rise. A huge debt burden eventually creates the fear that it might not be repaid. Or, that the government will have to raise taxes to pay for it. This acts as a further drag on economic growth.
Senate Republicans are threatening to not confirm any of President Obama’s appointees without a budget. The House is threatening to not approve a debt ceiling increase until the Senate passes a budget. Of course, the American people will never be told why by the press. Do they have the guts to actually do it?
