The following editorial first appeared in the Kansas City Star:
Place a restaurant order and expect to pay the bill. That’s the circumstance facing the federal government. Dinner is over; the bill is owed. It’s the height of foolishness for Congress to think there is any way around raising the U.S. debt ceiling from $14.3 trillion. Running out on the check is not an option.
Members of Congress know this. If the debt ceiling is not raised, the United States cannot legally borrow. Not borrowing means no money for expenses including Social Security payments, employee paychecks, federal work contracts and more.
The greatest threat is that failing to raise the debt ceiling would lead to a federal debt default, which would crumble faith among those taking out American bonds, an event that Wall Street, the U.S. Treasury and financial agencies worldwide believe could lead to global economic chaos.
Consider this statement from the nonpartisan Congressional Research Service: “To put this into context, the federal government would have to eliminate all spending on discretionary programs, cut nearly 70 percent of outlays for mandatory programs, increase revenue collection by nearly two-thirds, or take some combination of those actions in the second half of FY2011.”
The problem facing Congress is one of reality versus politics. Republicans are recklessly taking a stand against something that is necessary for fiscal health. But, by turning this into an issue on which they insist the United States has a choice (at least when they’re before cameras and microphones) they’ve created significant resistance among their base of voters. A recent Gallup Poll showed an astounding 70 percent of Republicans oppose raising the ceiling.
The Treasury Department is now borrowing from federal pensions to keep the government operating until Aug. 2. While needed to stop global financial chaos, this is not a smart long-term move. And it has costs as a short-term move: A similar impasse in 2002, lasting seven days, cost the government $18 billion in interest.
The GOP earlier this year threatened to shut down the government to get federal spending cuts that amounted to just more than twice that amount. Where is the sense in fighting for savings that are then wasted on political games?
The existing debt is the result of choices the nation made to deeply cut taxes and wage two expensive wars, as well as the deepest economic downturn this country has suffered since the Great Depression.
Congress must stop playing games and make it possible for the United States to pay its bills.
Comments (12)
Add commentDon't raise the Debt
This editorial is scant on details of how to solve the crisis this country is in as a result of over spending. No solutions are offered, just raise the debt so that the party can continue. Why is it that the military is not mentioned? We must not raise the debt. If we do, this country is doomed. You can not spend your way to prosperity and wealth. Anyone who proposes this is a fool or a liar. If your credit accounts are maxed out do you resolve to double your credit cards and spending? The solution, which will not be pain free, is to close most of the 900 military bases around the world, fire most of the military/industrial complex contractors, cut all government agencies that cant be eliminated by 30 percent, freeze all federal pay scales, withdraw from the three wars immediately, cut foreign aid by 60 percent, restate the taxes on the wealthy that Bush rolled back, impose a 5 percent tax on all imported goods from China, and see that all corporations pay some taxes ( think GE). This problem can be solved, and it does not require the wrong headed Keynesian idea that we can spend our way out of the hole.
Keynes is, so far, the only
Keynes is, so far, the only economist of the 20th century whose ideas have been tested and proven on a large scale. Everyone else's are just wishful thinking or a failed experiment.
In any case, if your choice is between doubling your credit card debt or losing your job, house, and ability to provide for yourself, I think the correct course of action is obvious. It's easy to say solutions will not be "pain free" when you aren't unemployed, impoverished, or otherwise in need of government services, but in reality, that pain will cause more harm to the nation than simply raising the debt.
You suggest major government spending cuts. Okay. You do understand that the government is made up of employees, correct? What do you think cutting the military sharply will do? It will flood an already overpopulated job market with newly unemployed soldiers. Cuts everywhere else will do the same for civilian government employees. And then of course the government will have a greatly diminished capacity to mitigate the effects of a poor economy, thus making them worse.
In reality, bumping up taxes for the wealthiest Americans to their pre-Bush levels (even better if we went for Reagan levels), closing some of the corporate and individual tax loopholes that get abused, ending our TWO wars, and modest cuts in the most bloated government programs (like the military) would close the deficit. No need to go all Ron Paul on spending.
Agree with PP
on how to close the deficit. I think it's going to be very interesting how republicans, all on board with Ron Paul's plan, will be recieved by the elderly this fall and next spring.
Party On!
One poster suggests that doubling your credit card debt in an attempt to maintain yourself would be the reasonable thing to do. This type of thinking by our politicians is what has put us in this mess. Simply stated, spending must be cut and taxes must be raised. If not, the interest on our debt will soon consume all the income of the federal government just like if we make minimum payments on a maxed out credit card. The Fed, having the power to create money out of thin air and thus far the ability to borrow from the rest of the world is robbing the ordinary citizen by destroying the value of the dollar and causing inflation. Interest rates must be raised, people must live more frugally, and the government must stop its failed policies. Keynesian economics have failed us, have enriched Wall Street with free money to speculate, and bailed out the banksters and the rest of the world by putting the tab on the US worker. Think of it this way, the spending binge Bush started and O'Bama continues totals mayby 125,000 per US family. Can you pay your share or would you rather have had the government send you a check for that amount rather than giving it to the Banksters??
@dingdong: the U.S. has been
@dingdong: the U.S. has been dealing in supply-side economics since the 80's. Keynesian economics is consumer-side. Trickle down economics has failed us, not Keynes.
Devaluation of the dollar likewise is not a big issue. China has been doing it purposely to their currency for years for their own benefit. Unless major stagflation occurs, devaluation of the dollar encourages domestic job production and manufacturing, because exports become worth more and imports worth less.
Also, for your reference (and to keep you from spouting off ridiculous statements), inflation has been very low as of late. There was even some deflation in 2009, which oddly enough was the middle of a nasty recession. Funny, that. In fact, if you look at the chart I've linked to below, you'll see that during times of great economic growth, inflation goes up (but no one complains about it). During recessions, it goes down.
http://www.inflationdata.com/inflation/inflation_rate/currentinflation.asp
I recommend you go learn yourself some things about economics, because your entire argument is founded on non-existent dangers/problems and knee-jerk reactions (inflation is always bad! Devaluation is always bad! Debt is always bad!).
Simply raising taxes and
Simply raising taxes and cutting a few over bloated things won't even touch our debt. Not even close.
"simply raise the debt" because we need it to survive. Can you look down the road at all? What do you think will happen? Keep on this path and the amount of jobs we lose now will look like nothing when we literally can't print any more money and china says "pay up".
Think ahead. I thought change was coming?
You do realize, don't you,
You do realize, don't you, that this whole issue of the national debt materialized for no real reason in the last couple years, right? There's no special reason now that Republicans are focusing on it, save that a Democrat is in office.
The below chart illustrates the issue well. As you can see, the Bush tax cuts contribute to the majority of the federal deficit, followed by economic factors, the Afghanistan and Iraq wars, and then all the stuff Obama and Bush did to mitigate the recession's effects. Getting rid of those Bush tax cuts and increasing taxes on those making, say, $250,000 or more a year, raising the corporate tax rate a bit, and ending a number of loopholes would take a huge chunk out of the deficit, maybe even closing it altogether. Ending the wars would take out another sizable chunk, and then further cutting the Pentagon's funding by another, say, $100-200 billion, would probably balance the budget or even give us a surplus.
We have met the enemy and he is us.
Certain posters on this issue will not be swayed by facts and logic. If one truly believes that the devaluation of the currency is no big deal, this opinion shows a complete lack of understanding for what is happening. It is robbery, pure and simple. Oil at $130 a barrel is a direct result of devalue of the dollar. Bread at $5.00 a loaf, gas, everything that is needed is increasing. Sure the government tells us there is no inflation, only a simpleton would accept that statement. The ability to print money out of thin devalues existing dollars. Fact: No fiat currency in the history of man has lasted. Only a return to real money, something backed in gold or silver combined with massive cuts in government spending will save the dollar. The rest of the world is tired of the manipulations of the US FED, and is moving to trade in a basket of currency rather than the dollar. So live in your fantasy world of no inflation. After all you can by a big screen cheaper than ever from China, but your living expenses are going to the moon.
WRONG. The gold standard was
WRONG. The gold standard was not actually that great, and pretending like fiat currency is the cause of all our problems is silly.
http://www.npr.org/2010/11/13/131297988/gold-standard
Also, oil is getting expensive because we're CONSUMING MORE. This isn't inflation, this is supply and demand in action. Get your facts straight.
Throwing in the Towel
The Dingdong is throwing in the towel and going on a spending spree. Now that economics has been explained, the error of my ways is obvious. Time to max out the credit cards, borrow from any fool who will loan, and let the kids inherit the bill. Here I thought that every day when the dollar lost value and oil went up in price, there must be a connection but now I know there isnt. Guess those towelheads must not care that the supply of money is several time larger now than it was a few years ago. Or that Obama has spent more money (debt) than all Presidents preceding him combined. Lets spend our way to prosperity! Obama only wants about 2.7 trillion more dollars to get him through. We can borrow it from the Chinese, whats the problem? And right now the interest on the debt is only 616 million per day. Whee, this economics is fun!!!
Play nice
I don't appreciate the towelhead reference Dingdong, it's not cool.
What you are saying about the methodolgy of devalueing the dollar is true. However, with a global economy and competition of resources isn't it just as true what PP says? Everything costs more, period. Oil, the lifeblood of economy lubrication goes up and EVERYTHING goes up. Can't change that reality. Well, the only that that hasn't been going up is the majority of US wages. Never fear though, the investment class is supposedly going to 'trickle down' their tax breaks (someday).
Lastly, you only tell half the story. Yes, completely true that Obama has rung up more debt then his combine predecessors. Want to compare that to something? How about in Alaska where no one seems interested in plugging the pension liabilities. And if we have a Dem Gov in a few years that addresses it and pays it down you'll accuse him of... wait for it....ringing up the biggest Alaskan deficit in history. Someone has to fix what got broken. Stupidly low taxes create tax revenue shortfalls. So do excessive spending habits.
OH, super lastly. The world isn't outraged at Obama or the Fed for manipulating currency markets. They know where the problem lies. Bankers and Wall Street using the rest of us as chips in their games. Or hadn't you noticed. Don't worry, if you forgot already there's a new story every week.
http://money.msn.com/business-news/article.aspx?feed=OBR&date=20110525&i...
With the August 2 deadline
With the August 2 deadline for a conclusion on the country's debt ceiling closer than you think, President Obama left on high-pressure negotiations Wednesday saying "I've reached my limit.". If the nation default on its obligations and its credit rating is lowered, the impact might be devastating for the entire economic climate. I read this here: Obama walks out of debt ceiling debate saying he has reached his limit