There Is No Debt Reduction Lockbox

Back in 1961, President Kennedy signed a law to “authorize the acceptance by the Government of gifts to be used to reduce the public debt.”  A post office box was established for this purpose, and Treasury Department later set up a system for online donations to the Bureau of the Public Debt.

Quite a bit of money has flowed into this account over the years.  The high-water mark was $3,063,57.05 in 2009.  It’s declined a bit since then, but gifts to reduce the debt have totaled almost two million dollars so far this year.

Every now and then, you’ll come across a Web site or mass email that encourages people to send all their tax payments to the Bureau of Public Debt, instead of paying the IRS.  Since these debt-reduction gifts are tax deductible, the idea is to spark a mass movement that enforces a balanced budget upon spendthrift Washington.  Every dollar you send the Bureau is a dollar politicians can’t waste on pork-barrel spending!

Of course, even if the Bureau of Public Debt really did work as advertised, diverting tons of tax money into its accounts wouldn’t do much to clamp down on runaway spending.  Congress would just go right on spending what it wants.  The net effect on our national debt would be far, far less than the “contribution” boosters imagine.  It cannot be repeated often enough: the debt crisis was caused by spending, not a lack of revenue.

At any rate, it turns out the whole “contribute to reduce the debt” thing was a sham.  The Washington Post ran a story on Sunday, breaking the horrible truth to the gullible suckers who have been “donating” cash, checks, and even gold coins in the misguided belief they were helping to bring down the debt:

But the contributions don’t specifically go to pay off existing debt. The government deposits them in the Treasury Department’s general fund, in essence the government’s main checking account.

“The gifts go toward funding the federal government, not to pay off the debt,” said Mckayla Braden, a spokeswoman for the Bureau of the Public Debt.

How do these scam artists justify making a mockery of the law President Kennedy signed back in ’61?  The same way they justify everything else: creative accounting.

Since the contributions can reduce the amount of money the government would otherwise have to borrow to cover its expenses, federal officials stress they are complying with the 50-year-old law enabling the public to give gifts to lower the debt. “The government doesn’t have to borrow more,” Braden said.

The exact same thing will happen to any “enhanced revenues” we are foolish enough to allow our irresponsible political class to extract from us, as part of any debt-ceiling deal.  If you let them raise taxes, they’ll just spend the money.  If you let them promise spending reductions in the future, that future will never come. 

It’s the same thing that happened after Ronald Reagan signed on to the Tax Equity and Fiscal Responsibility Act of 1982.  It’s the same thing that happened after the elder George Bush was tricked into betraying his famous “read my lips – no new taxes” pledge, in the name of fiscal responsibility.

I can’t muster too much sympathy for the poor chumps who complain to the Washington Post that all their high-minded contributions for deficit reduction were simply Hoovered into the general fund, and spent on the same old corrupt garbage that put $14 trillion in debt on the backs of our children.  They should have known better.  We should all know better by now.  There are no lockboxes.