This week, Congress again considers raising the debt ceiling, a move that on Monday prompted Standard and Poor’s to warn the U.S. that it could lose its coveted status as the world’s most secure economy if our political leaders fail to rein in the nation’s nearly $14.3 trillion debt.
The bitter partisanship between the White House and Congress further escalated over the weekend with Treasury Secretary Timothy Geithner calling House Speaker Boehner’s bluff on the republican threat to withhold support for raising the ceiling unless they see substantive commitments to cut spending and reform the budget.
Should Congress go ahead and raise the debt ceiling since there’s no way to prevent it? Or should they tackle serious structural reform now to save our national debt from spiraling out of control? S&P’s warning is a shot across the bow of both Congress and the White House to stop bickering and find a solution. Shock and Awe are back this week, in the name of civility, to duke it out. Who’s right? You decide.
We have had 44 Presidents. Only one, Andrew Jackson retired the debt.
Think about it: 43 Presidents assumed debt on behalf of our nation. The current President is no different. We’ve taken on debt to meet our greatest challenges from the Depression to Infrastructure. Unlike states which have capital budgets that rely on borrowing debt, the federal government pulls its funding both operating and capital entirely from one budget.
Here are some guiding and probing questions to consider:
- What would Keynesian economic theory suggest we do?
- Who will benefit from the raising or lowering of the budget ceiling? Who will be hurt?
- If cutting the budget deficit is inevitable, what should be our top priorities?
Like their state counterparts and not unlike a household with decaying gutters and a roof in need if repair, the Federal government needs debt much like businesses and homeowners need capital to be vital. The issue then is not one of the debt we borrow, because we will borrow but one of whether the debts we have accrued are too big and how we repay them.
What we need is a discussion that matches priorities with a concerted effort to reduce debt overall but that requires complexity like walking away from pledges of no cuts and no taxes to create a solution. We need politicians to act like adults and make adult choices rather than use red herrings like debt limits that in the end won’t solve the fiscal crisis.
The bender’s over America. Put away the simplicities of to raise or not to raise the debt, sober up and prepare for adult conversation.
Don’t raise it.
Ben Franklin said it best, “Rather go to bed supperless than rise in debt.”
President Obama, Members of Congress, it’s time to rein in the spending and go supperless if we have to. The time has come to starve ourselves of pork platters and skyrocketing debt and get serious about structural fiscal reform to keep the national debt from further spiraling out of control. This year alone, Congress will spend $3.7 trillion. That’s about $10 billion per day.
Raising the debt ceiling so we can borrow more does little to address the underlying problem: we’re spending more than we’re taking in and by the simplest math, that’s unsustainable. We need meaningful fiscal reform and the accompanying gut check by our political leaders to stop the hemorrhaging that’ll cost our future generations dearly. S&P’s warning this week should be a wake-up call to Washington.