My own Congressman has a heart-warming analogy on his website about why a Constitutional amendment requiring a balanced budget is our most important national priority right now. Yes, he’s one of those who is against raising the debt ceiling, even when his party is offered spending cuts going far beyond their wildest imaginations if only they’ll allow the collection of new revenue from the very richest Americans by allowing ‘temporary’ tax cuts to expire.
His analogy gets you right here, in your Little-House-on-the-Prairiest places: “Every day families in southeastern Pennsylvania make tough decisions in order to live within their means. Many are forced to cancel their family vacations, put off a car repair, or cut out purchases they can no longer afford. When it comes to our country’s bank account, however, both parties in Washington have not been practicing these same responsible habits.”
But why stop there? Let’s take the analogy a little further, because you know, the cuts that have been proposed by the President and rejected by his Republican opponents go a wee bit beyond cancelling your family vacation or putting off a car repair. What do families do when their incomes are cut dramatically and abruptly, say, when one or both income-earners lose their jobs, Congressman? Let’s finish your story of what happens every day.
Why, sure, first Mr. and Mrs. Smith cut everything that’s a luxury. Vacations, cable, subscriptions, leisure, eating out. They defer maintenance of cars, houses, and their own bodies. Golly! I guess that means that people who were making the things that the family used to buy are going to have a bad story of their own to tell soon! And gee, I hope the story gets better soon, because when you don’t maintain cars, houses and bodies, they break and then they’re really expensive to fix. Or you can’t get to work, you end up homeless, or you end up dead, I guess the story could go that way too!
Oh, dear. This is turning into a bad story indeed. This is a story of how people who were very well-off become people who are poor.
I guess that’s what my Congressman is saying: that if the United States of America is one of those families, it’s time for the United States of America to be poor. No more aircraft carriers, supporting education for the middle-class, encouraging corporate research and innovation, fighting the global war on terror, relieving communities after natural diasters, or providing a safety net for us, no sir! No more making sure that our elderly don’t end their lives in desperate poverty. No more investing in infrastructure or health. You got to tighten your belts and make do.
Now this is a new thing in my lifetime, I grant you: a Congressman who is going to run on the argument that it’s time for America to take its place among the poor and struggling nations of the world. I don’t have to study go to Zimbabwe any more to study Zimbabwe: my Congressman is doing his best to bring it to me. Thanks, Congressman!
Now there are other stories we could tell about the Smiths. Sometimes that family goes and gets several new jobs, none of them as good as what they had before, and brings in enough money that they only have to cut a few things, juggle their budgets. You know, they bring in new revenue. They look for jobs, they try to get back to where they were, because they’d rather be well-off than poor. But my Congressman doesn’t like that story for America!
Sometimes that family takes on more debt in the short-term and works its way out of that debt slowly rather than drastically. all the while looking for new revenue. My Congressman doesn’t like that story either!
Sometimes that family declares personal bankruptcy and keeps most of its property because the courts protect them. Yeah! That’s like not raising the debt ceiling, isn’t it? Or like a company, right, America should be more like corporations, and do a Chapter 11? Oh, dear, you mean that analogy doesn’t work? Nations don’t go out of business?
Well, maybe not until now.
I guess my Congressman also wants to see how that story ends. I don’t know that I’m in the mood for a sad story with a depressing ending at the moment, though.
I like the idea of a debt ceiling without a limit. We should rename it something better and more accurate like the debt cloud from another planet.
I hope we default. The near term pain of a default will force a reckoning with the bloat and excess. It will be instant depression (gov spending is a huge part of GDP and jobs) and a miserable few years but waiting on the other side of that will be a hungry nation with more power than people realize. All around me I see innovation in robotics, 3d printing, rethinking EDU, software, hardware. We have what it takes to recover and rebuild….. if……
We scale back military spending… lets face it war = jobs. If you dump an arsenal on innocent people its bad for karma but you need to make more boom sticks to replace those dropped. A miserable formula for jobs and hurtful to the innocent. We inflict pain and death on people who do not deserve it in order to keep people employed in industrial milatoronics.
Thats a sideshow thought compared to the biggest problem. We have to gut the big banks, like they are grizzly bears that ate an entire boy scout troop. The banks have tasted the flesh of the american people and they will just keep feasting unless we wreck them. There must be a separation between investment banking and lending banks. IB’s need to be set adrift out of the TBTF pool and allowed to take all the risk they want and get wiped out. No matter what we do if we do not fix this underlying problem it will zombify the entire American economy until we reach bannandom and from that we will not return. In addition to gutting the guilty must be prosecuted or there will be no limits to criminality by the banking class.
Imagine a soccer game in which half the players could do whatever they want. No one would watch and there would be no game, only anarchy and a bunch of listless players laying around trying to play by the rules. We need a referee, we need rules, and we need punishment or the the game isn’t worth playing or watching.
The debt ceiling is another tool of fear used by both parties to get what they want for who knows who. (banks, stock market, property assets) Obama said over the weekend “It’s very important that the leadership 1/8in Congress 3/8 understands that Wall Street will be opening on Monday, and we’d better have some answers,” He didn’t say hey guys the American people go to work on monday, just that the stock market opens. Screw the stock market, its a ponzi scheme that keeps the assets of the rich bloated by taxing he American people. If it were regulated it would work as an investment vehicle for the public but its just a tool to funnel future tax dollars into wealthy hands while IPO’ing pitiful job engines like Linkd in beyond decades of future value.
They will tell you once again just like Bush or Paulson did. We make war and torture or die from terror. Sign the blank check for bailouts or watch civil war in the streets. Raise the ceiling or the market will crash.
I vote to not raise but only if the military is scaled back and banks are gutted, if not then it doesn’t matter what they do as we are screwed either way.
I just sent off a letter to our congressman. I told a similar story but my story was about what happens to families when the debt ceiling isn’t raised. Interest rates go up on credit card debt, mortgages, car payments, squeezing families even further. Even those who still have jobs will feel the pinch. Those receiving money from the government will, of course, be more pinched. Meanwhile, those at the top will be immune from much of the damage. I’ve never been so frustrated with both sides–republicans for screwing average Americans and democrats for letting it happen.
Laura.
Chairman Bernanke has informed the American people that interest rates will go up on consumer debt and mortgages, however this is not true. It is the repetitive tack used in our crisis riddled times to frighten people into passivity. Bernanke has an excellent track record of half truths and outright lies.
The US government takes in enough tax revenue to pay their creditors, without raising the debt ceiling they would be forced to instantly balance the budget but we would not default on the debt. No one wants to do this because it means we go into a depression as jobs will be cut due to federal government spending cuts.
There is the conundrum. Can we really rely on congress and the executive branch to raise the debt ceiling and then cut spending over time and balance the budget? If we do not and the ponzi continues on it will probably lead to a depression far worse than the one we would face if we cap the debt ceiling tomorrow.
Since there are historians lurking around can you cite a historical example of any nation or empire that had rampant debt and big wars that successfully navigated out of the problem within a short time span?